Message from the Queen

Lord Luce: My Lords, I have the honour to present to your Lordships a message from Her Majesty the Queen, signed by her own hand. The message is as follows:
	"It gives me great pleasure to receive the warmest congratulations of your House on the occasion of my 80th birthday, together with your expressions of deep affection and highest regard for my long continuing health and happiness".

Japanese Knotweed

Baroness Sharples: asked Her Majesty's Government:
	What new initiatives they have in mind to combat the spread of Japanese knotweed.

Baroness Farrington of Ribbleton: My Lords, Defra is contributing £160,000 to a four-year scientific research project, in collaboration with others, into the biological control of Japanese knotweed.

Baroness Sharples: My Lords, I thank the noble Baroness for that reply. However, does she accept that, to a great extent, fly-tippers are responsible for the problem in that the rubbish that they dump includes Fallopia japonica? This plant can grow to nine feet and can push its way through concrete. When these men are caught, they are given very small fines. Has the time not come for the fines to be increased?

Baroness Farrington of Ribbleton: My Lords, the most important thing is to ensure that appropriate sites are available for people to dispose of Fallopia japonica, as it spreads so readily. We are seeking to do that in collaboration with the Environment Agency. Obviously the question of fines will be considered and reviewed.

Baroness Gardner of Parkes: My Lords, what is the legal position? We should remember that in Australia the water hyacinth choked up all the rivers and a penalty had to be introduced for even allowing that plant to grow. We should also remember what rabbits have done in Australia. The translation of species from one country to another can be very damaging. What are the legal obligations on people in regard to this nasty weed?

Baroness Farrington of Ribbleton: My Lords, I am well aware of the problems to which the noble Baroness refers and I am surprised that she did not also mention the cane toad as one of Australia's problems. It is an offence to cause or assist the spread of this plant in the wild. The Environment Agency has produced a large quantity of material that people can use when seeking to eradicate Japanese knotweed. Obviously that material has to be used sensitively as the plant grows near watercourses and chemicals must be used with great care. I understand the concern about introducing other biological methods of control, which is why we are taking such care through the research project.

Baroness Miller of Chilthorne Domer: My Lords, the Question asked what new initiatives there are. Is the Minister aware of some of the community initiatives? For example, the village of Leigh in north Devon has its own village task force which goes out and pulls up Japanese knotweed, and it raises funds for that purpose. Will the noble Baroness ensure that Defra encourages and supports such initiatives?

Baroness Farrington of Ribbleton: My Lords, I was not aware of the project to which the noble Baroness referred, but I am aware of the large-scale project headed by Cornwall County Council. I shall certainly ensure that Defra uses that information and that advice is given to the Local Government Association.

Baroness Byford: My Lords, I understand that, in 1999, some £1.65 billion was spent on chemical spraying of this species. How much was spent last year? I also understand that the research centre is looking at three ways of tackling the problem. One is a stem-boring weevil; another is a sap-sucking insect; and a third is a leaf-spot fungus. Has the research shown whether there are any repercussions from the use of those methods?

Baroness Farrington of Ribbleton: My Lords, the research project is due to report next year. Obviously, the researchers are carefully evaluating the three biological methods of control that could be used, but they must ensure that those methods do not have a deleterious effect, as has been the experience with the introduction of non-native species in other countries.
	I do not have the figure for the chemicals. The latest assessed figure was £1.6 billion in 1999, so it is a large and growing problem—I apologise for using the word "growing".

Lord Roberts of Conwy: My Lords, are the Government taking any action against the spread along our rivers and watercourses of what I believe is called "Himalayan bamboo"? I am sure the Minister will appreciate that it is extremely difficult to spray this rapidly spreading growth because of its proximity to waterways and the danger of polluting streams.

Baroness Farrington of Ribbleton: My Lords, Himalayan balsam is a problem. I have some in a stream close to my home. Detailed advice is available precisely because of the noble Lord's point about the proper use of chemicals close to watercourses.

Schools: Improving Attainment

Lord Ahmed: asked Her Majesty's Government:
	What action they have taken to improve the educational achievements of children from the poorest indigenous and British Muslim communities in state-run schools.

Lord Adonis: My Lords, we are investing in particular in sustained improvements to teaching and leadership in schools serving these communities and in other targeted programmes including the literacy and numeracy strategies, Sure Start, Excellence in Cities, academies, London Challenge and the Aiming High strategy, the last of which is focused particularly on underachieving black and ethnic minority pupils. Last year's GCSE and test results show that the attainment gap for Pakistani and Bangladeshi pupils has more than halved since 2000.

Lord Ahmed: My Lords, I thank my noble friend the Minister for his reply, and I congratulate the Government on improving standards for all pupils in primary and secondary education in the past six or seven years. Will the Minister accept that the attainment gap between Pakistani, black and white working-class children, compared with the national average and Indian children, is still unacceptable?
	Last night, I had the pleasure of presenting certificates at a tuition centre, Best Tutors, where year 8 and 9 children were achieving excellent A* grades because of the hard work that local communities in Leyton are putting into education. Will the Government consider encouraging and funding more homework groups, tuition centres and supplementary weekend schools to achieve higher standards?

Lord Adonis: My Lords, my noble friend is right that there is still more progress to make. I pay particular tribute to the work of supplementary schools, which do outstanding work with our minority communities. Only last week, I hosted a reception for ambassadors, high commissioners and the many others engaged in leading our 5,000 supplementary schools nationwide.
	However, we can point to the great progress made by the Pakistani and Bangladeshi communities in particular. In 2000, 29 per cent of Pakistani and Bangladeshi pupils achieved five or more good GCSEs, compared to 49 per cent of all pupils. By last year, attainment had risen by 19 percentage points in the Pakistani community, and 23.7 percentage points in the Bangladeshi community, compared to an average national increase of just under five percentage points—as I say, more than halving the attainment gap. Very good progress is being made in these communities, but there is more to be done.

Baroness Buscombe: My Lords, the Minister has just said that children from Muslim communities are achieving good results in our schools. Does he agree that it is important for the Government to focus on improving the quality of education for all our children, regardless of their background?

Lord Adonis: My Lords, I could not agree more. That is why we are making such big investments in all schools, including the big increase in budgets that was announced by my right honourable friend the Chancellor in the Budget.

Baroness Walmsley: My Lords, does the Minister agree that the key word in the Question of the noble Lord, Lord Ahmed, was "poorest"? That is the common factor in low educational attainment, rather than ethnicity. Chinese, Indian, Irish and mixed White and Asian heritage children achieve results higher than the national average. Will the Government therefore redouble their efforts to reach their target of eliminating child poverty?

Lord Adonis: My Lords, we will certainly continue our efforts in that regard. I should point out that the population of children who are eligible for free school meals breaks down differently between ethnic groups. Those children from the Pakistani and Bangladeshi community who are eligible for free school meals now perform significantly better than those from the White working-class community. In the schools that have the highest concentrations of pupils entitled to free school meals, there is a wide variation of performance. Our challenge as a country is to see that we raise all schools to the highest level of performance, accepting that those that have poor intakes face bigger challenges.

Lord Dearing: My Lords, the Minister referred to Sure Start centres. I know that the Government are giving priority to establishing them in areas of social deprivation. Does the Minister agree that there needs to be a proactive reach-out from those centres to poor families who do not know what is going on, especially to immigrant communities? There is something special to be done in that regard.

Lord Adonis: My Lords, the noble Lord is right about the importance of Sure Start working with communities more widely, which is part of the reason why it is placing such emphasis on community engagement in all its activities. As more primary schools become locations for children's centres, I believe that outreach will improve.

Lord Judd: My Lords, does my noble friend agree that in our proper concern about excellence and high standards in education, we should find every way possible to celebrate the work of teachers in the poorest and most socially demanding parts of our country and to give them all possible support in the front line that they are tackling?

Lord Adonis: My Lords, I agree with my noble friend. We are doing a good deal to celebrate the work of teachers. The work my noble friend Lord Puttnam has done with the national teaching awards comes immediately to mind. But the best thing we can do to celebrate the work of teachers is to see that they are paid properly, and under this Government there has been a significant real-terms pay increase for teachers that has been particularly attractive to teachers who face the biggest challengers.

Lord Northbourne: My Lords, does the Minister agree that parents and carers play an important part in encouraging and motivating children? Does he also agree that in some immigrant communities language is a huge problem in enabling parents to support their children in school?

Lord Adonis: My Lords, all the research supports the point made by the noble Lord that parental engagement is as important as any other factor in the performance of children. My noble friend referred earlier to the work of supplementary schools. One of the outstanding contributions that they make in minority communities is to engage with the parents as much as with pupils and instil a joint desire to learn, particularly among those for whom English is not a first language.

The Earl of Listowel: My Lords, does the Minister recognise the need to recruit more foster carers if children in the care of the state are to achieve their potential in school?

Lord Adonis: My Lords, I entirely agree with the noble Earl. That is why we are looking at arrangements to improve incentives for foster carers to see that the number coming forward is increased.

Lord Ramsbotham: My Lords, is the Minister making any special arrangements for people from these communities who end up in other state-run schools; those in Her Majesty's young offender institutions?

Lord Adonis: My Lords, as the noble Lord knows well, we have significantly increased the support for education for those in custody under the age of 18, including new entitlements to work and training that were not previously available. Responsibility for prison and young offender education has moved from the Home Office to my department where we hope it is being given a stronger educational focus.

Roads: Cyclists

Lord Howarth of Newport: asked Her Majesty's Government:
	What further plans they have to ensure that cyclists abide by road traffic laws.

Lord Davies of Oldham: My Lords, road traffic law and the Highway Code apply as much to cyclists as to anyone else. Enforcement of the law is a matter for the police. They can prosecute cyclists who ride dangerously or carelessly, ignore traffic signs or signals, cycle on the pavement or commit any other road traffic offence. These offences carry maximum fines of between £500 and £2,500. Also, the police and community wardens can issue £30 fixed penalty notices for cycling on the pavement.

Lord Howarth of Newport: My Lords, does my noble friend agree that cyclists who habitually ride on the pavement, shoot red lights, ride the wrong way up one-way streets and cycle without lights after dark assume that they can get away with this illegal and anti-social behaviour because no one will be able to identify them? Therefore, are the Government willing to consider carefully whether a new requirement that cyclists should display on their clothing a clearly readable personal registration number and carry a registration card containing relevant information would confer benefits that outweighed the bureaucracy and costs that such a system would entail?

Lord Davies of Oldham: My Lords, I detect that that proposal has not won universal accord in the House. We will look at it, but I think that my noble friend will recognise that we have to keep the problem of law-breaking cyclists in perspective. On the whole, problems with road accidents lie elsewhere and not too much with cyclists.

Lord Marlesford: My Lords, does the Minister realise that, just as pedestrians may feel intimidated by cyclists on pavements, cyclists often feel intimidated by road vehicles, and that cyclists ask for no more than what pedestrians rightly expect, which is to have separate lanes from road vehicles?

Lord Davies of Oldham: My Lords, the noble Lord is right that cyclists suffer disproportionately from accidents on the road because they are a vulnerable group of users. However, that does not excuse riding on the pavement, which is against the law. The noble Lord will recognise that we want to make the road safe for all users. That requires consideration for others by all road users, which, of course, is the basis of the Highway Code.

Lord Bradshaw: My Lords, does the Minister agree that the real problem to which the noble Lord, Lord Howarth, referred is enforcement? The priorities of the police lie otherwise than in prosecuting cyclists—the police have huge priorities to attend to. Enforcement will gradually be transferred to community support officers. There is a three-year programme for a massive increase in the number of these people and a programme for increasing the number of wardens. Will the Minister carefully review the powers of CSOs and wardens, to make sure that they can issue tickets or report for prosecution the people who are committing the offences? That will mean that we shall at least put enforcement in place. Secondly, will he look at the local transport plans that are currently before him to ensure that they contain adequate provision for cycling?

Lord Davies of Oldham: My Lords, as I indicated in my original Answer, community officers already enjoy the power to levy a fixed penalty of £30. The noble Lord is right: we are looking to that strategy—rather than depending on the police, with their many other priorities—to enforce the law as far as cyclists are concerned. I am glad that the noble Lord has brought the other dimension into the equation; namely, how we can make the roads safer for cyclists. We are embarked on a strategy for local authorities to improve provision for cyclists. A number of towns are carrying out pilot studies, which we are looking at very closely, into ways in which that can be done.

Lord Winston: My Lords, is not one of the problems the fact that many local authorities supply totally inadequate facilities for cyclists? In my borough of Hammersmith and Fulham, I have found it virtually impossible to cycle without infringing the law, short of repeatedly dismounting from the bicycle.

Lord Davies of Oldham: My Lords, there is no doubt that there is a challenge concerning safe provision for cyclists, especially in our big cities and large towns. That is why, as I said, we are looking at pilot studies that are being carried out by a number of authorities to find more effective ways to guarantee cycle lanes and protection for cyclists by separating them from other road users. That is the surest way to guarantee their safety and, let me say, the safety of pedestrians.

Baroness Knight of Collingtree: My Lords, does the Minister agree that this matter is causing a lot of concern? Never a day goes by on which those of us who drive cars do not experience a cyclist going straight past a red light when we are all stopped by it. Would it not be better if the cyclist had the Highway Code and other details issued with a bicycle when it is sold? I do not think that half of them even know what the Highway Code says.

Lord Davies of Oldham: My Lords, with the weight of traffic that has developed over recent years, there has been a growth in the culture of ignoring red lights by some cyclists. That is a very dangerous offence to carry out. However, I do not think that the problem is that they do not know what a red light means to a road user. You would have to be a fairly dim cyclist not to know that you are meant to stop.

Lord Anderson of Swansea: My Lords, there appears to be general agreement that this is a serious problem, especially for the elderly. I have heard that more than 1,000 pedestrians in London were injured by cyclists last year. Perhaps my noble friend can confirm that figure. He has outlined a whole battery of possible offences, but can he tell us how many convictions there have been for them?

Lord Davies of Oldham: My Lords, it is fair to say that we are in the early days of the fixed penalty notice regime, which we expect to tackle this problem. We are concerned about cyclists causing accidents to pedestrians on pavements and we are employing a strategy to reduce that problem. My noble friend will recognise that when we consider all the issues of road safety, the clash between pedestrians and cyclists is one of the more manageable areas, compared with the target figures to cut deaths among motorcyclists and car drivers.

Viscount Tenby: My Lords, the Minister is to be congratulated on the balanced way in which he has responded to the concerns and frustrations of people who use the road about cyclists. Might there be an opportunity to remind cycling organisations, which have quite a deal of power in these matters, of their obligations to remind their members of what they should be doing correctly and legally on the road?

Lord Davies of Oldham: My Lords, I am grateful for that constructive point. The cycling organisations act very responsibly in those terms. They are combined together in Cycling England, a new body that has resources to promote safety for cyclists. However, it will not surprise the House to hear that those who offend are least likely to be members of such organisations.

Lord Luke: My Lords, does the Minister remember my friend, the late Lord Clark of Kempston? He was run down by a bicycle outside this House and very nearly died at the time; in fact, it is probably true to say that he never fully recovered from that accident. At the time, assurances were given about the proper enforcement of the law concerning bicycles, especially in relation to effective lighting and conformity with road signs. Why does the situation seem to have got worse? Only yesterday, a bicyclist nearly caused chaos by riding across the pedestrian crossing outside this House. It really is time that something was done.

Lord Davies of Oldham: My Lords, the Government are responsible for the situation getting worse in one respect: we are keen to encourage cycling and there are more cyclists. Of course, some—a proportion—will not act responsibly. The noble Lord is right that cyclists are often tempted to think that they have the right to share wide pavements with pedestrians, but that is against the law. It does happen, and when it does it is not surprising that pedestrians are caught unawares and accidents happen. That is why we seek to increase enforcement. The problem with enforcement, which I think the whole House will recognise, is that the police have very many obligations. We expect community officers to fill this gap.

Sudan: Darfur

Baroness Williams of Crosby: asked Her Majesty's Government:
	What steps they will take to seek a cessation of the killing of civilians in Darfur, in view of the deadline of 30 April for compliance with the United Nations' recommendations by the Sudanese Government.

Baroness Royall of Blaisdon: My Lords, our aim remains an end to all violence in Darfur. That requires a comprehensive ceasefire and lasting political settlement. That is why we are pressing the parties to the conflict to reach an agreement at the talks in Abuja by the end of April. We are also working actively to support the proposed transition to a UN force in Darfur, and we have begun to apply sanctions against those responsible for the atrocities. We will continue to pursue all these points vigorously.

Baroness Williams of Crosby: My Lords, I thank the Minister for that reply. She will be aware that the killing of innocent civilians in Darfur region continues, as does the displacement of thousands upon thousands of people. She will also be aware of the great concern about the spilling-over of violent action by the Janjaweed into Chad and the refugee camps, which today house thousands of Darfur refugees. Can she say whether the attitude of the Sudanese Government to the presence of the United Nations force has changed in any way, and whether there is any hope at all that they might co-operate in action against the Janjaweed to control its terrible atrocities?

Baroness Royall of Blaisdon: My Lords, the Sudanese Government are still rather against a UN force. Sadly, they have linked the establishment of a UN force to the ending of the peace talks. We very much hope that those talks will conclude satisfactorily at the end of April, and believe that Sudan will then let in a planning mission, which we believe is absolutely key to ending all these ghastly abuses of the civilian population in Darfur. That is the only way of ending the violence.

Baroness Whitaker: My Lords, does my noble friend agree that women are among the most vulnerable groups of Darfur civilians? They are not only killed, but raped all the time as they try to go about their daily tasks. I know that the African Union has provided some firewood patrols, but obviously that is not enough as the numbers of violations of all human rights continue. What more can be done?

Baroness Royall of Blaisdon: My Lords, my right honourable friend the Foreign Secretary drew attention to that very point in his speech last night; rape is being used as a weapon of war in Darfur, as in many other places. As my noble friend says, AMIS is providing firewood patrols to try to assist women who have to go out of the camps to collect firewood. But clearly that is not enough. That is why we are supporting the UN agencies in Darfur, which are providing or seeking to provide protection and support for women who have been raped. We are also discussing these issues with the Government of Sudan through the joint implementation mechanism to try to change their views and attitudes to rape, because quite often it is a cultural problem.

Lord Hurd of Westwell: My Lords, is not the killing going on while the international community in effect drifts from one form of discussion to another? If, as I suspect, the international answer is the use of African troops, whatever badge they wear—whether it be the African Union, as now, or the UN—and if their effectiveness is the real issue, what logistical help, transport or training is NATO providing? Is it meeting other needs, and what is the obstacle to NATO doing rather more?

Baroness Royall of Blaisdon: My Lords, I do not believe that the international community is drifting. The situation in the Sudan is clearly very desperate, but the UN Security Council has passed and is enforcing many resolutions on this subject. Sanctions against four individuals have been imposed just this week. The noble Lord nods his head, but those are important steps forward. The use of African Union forces is of course extremely important, no matter what hat they wear. The African Union forces have been doing the best job that they can in very difficult circumstances. They have not received enough logistical support, although NATO has been providing the support that it can. We believe that, if the United Nations is allowed to go in, it will ensure better logistical support, better command and control, and better co-ordination between the forces and the UN humanitarian forces.

The Earl of Sandwich: My Lords, does the noble Baroness agree that an important factor is the awareness of the Sudanese people themselves of human rights abuse? Since there are a number of respected NGOs and legal aid agencies in Sudan, are the Government giving them encouragement?

Baroness Royall of Blaisdon: My Lords, we are certainly working with Sudanese NGOs on the ground. We seek to support them in their important work. If I can find out more information for the noble Earl, I will write to him.

Baroness Rawlings: My Lords, to go back to the question of civilians being killed, which must include children, the Sudanese health Minister has admitted a continuation of the increase in the mortality rate of newborn children, pointing out that 230 children died of measles during the past three months alone. What steps are Her Majesty's Government taking to support child health issues throughout Sudan?

Baroness Royall of Blaisdon: My Lords, we are providing support to NGOs working across the field, including health. This year we have provided £113 million to assist the people of Darfur. Some of that money will have been used to meet health needs.

Business of the House: Referral of Statutory Instruments to Grand Committee

Lord Grocott: My Lords, I beg to move the first Motion standing in the name of my noble friend Lady Amos on the Order Paper.
	Moved, That the following 10 Motions be referred to a Grand Committee—
	The Baroness Byford—To move, That the Grand Committee do consider the Water Resources (Abstraction and Impounding) Regulations 2006 (SI 2006/641) [30th Report from the Merits Committee].
	The Baroness Byford—To move, That the Grand Committee do consider the Gangmasters Licensing (Exclusions) Regulations 2006 (SI 2006/658) [30th Report from the Merits Committee].
	The Baroness Byford—To move, That the Grand Committee do consider the Gangmasters (Appeals) Regulations 2006 (SI 2006/662) [30th Report from the Merits Committee].
	The Baroness Byford—To move, That the Grand Committee do consider the Gangmasters (Licensing Conditions) Rules 2006 (SI 2006/660) [30th Report from the Merits Committee].
	The Baroness Hanham—To move, That the Grand Committee do consider the Housing (Interim Management Orders) (Prescribed Circumstances) (England) Order 2006 (SI 2006/369) [26th Report from the Merits Committee].
	The Baroness Hanham—To move, That the Grand Committee do consider the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006 (SI 2006/371) [26th Report from the Merits Committee].
	The Baroness Hanham—To move, That the Grand Committee do consider the Licensing and Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006 (SI 2006/373) [26th Report from the Merits Committee].
	The Baroness Hanham—To move, That the Grand Committee do consider the Management of Houses in Multiple Occupation (England) Regulations 2006 (SI 2006/372) [26th Report from the Merits Committee].
	The Baroness Hanham—To move, That the Grand Committee do consider the Selective Licensing of Houses (Specified Exemptions) (England) Order 2006 (SI 2006/370) [26th Report from the Merits Committee].
	The Lord Bradshaw—To move, That the Grand Committee do consider the Railway and Other Guided Transport Systems (Safety) Regulations 2006 (SI 2006/599) [30th Report from the Merits Committee].—(Lord Grocott.)

On Question, Motion agreed to.

Business of the House: Debates Today

Lord Grocott: My Lords, I beg to move the second Motion standing in the name of my noble friend Lady Amos on the Order Paper.
	Moved, That the debate on the Motion in the name of the Lord Patten of Barnes set down for today shall be limited to three and a half hours and that in the name of the Lord Bowness to one and a half hours.—(Lord Grocott.)

On Question, Motion agreed to.

Iraq: Fatal Shootings of Sergeant Steven Roberts and Zaher Zaher

Lord Goldsmith: My Lords, with the leave of the House, I wish to inform the House of decisions taken by the Crown Prosecution Service and the Army Prosecuting Authority in a case which has attracted a great deal of media attention. The case concerns an incident in Iraq on 24 March 2003, which resulted in the fatal shootings of Sergeant Steven Roberts, formerly of the 2nd Royal Tank Regiment, and Mr Zaher Zabti Zaher, an Iraqi.
	The Crown Prosecution Service has now informed me that, after a full investigation of the case and a careful review of the evidence, there is insufficient evidence to institute criminal proceedings in this case. The Army Prosecuting Authority has also had the opportunity to examine the evidence in this case, including that obtained by the Metropolitan Police, and has decided that there is insufficient evidence to charge any of the servicemen with military offences.
	The CPS has produced a review note explaining its decision, which has been placed in the Libraries of both Houses. As appears from that note, on the evidence available when I asked the Crown Prosecution Service to consider the case, it might have been perceived that British soldiers had shot an unarmed Iraqi civilian, Mr Zaher, a number of times even after he had been severely injured and was in no position to pose a threat to anyone. In the course of firing at Mr Zaher two bullets had struck Sergeant Roberts, who was killed.
	At the request of the Crown Prosecution Service, the Metropolitan Police carried out further inquiries, which resulted in the interview of the United States soldiers who had witnessed part of the incident, a detailed statement from an Iraqi witness, and an autopsy on the body of the deceased Iraqi citizen. As its review note states, the Crown Prosecution Service believes that it now has the fullest account of what occurred, although the passage of time had undoubtedly adversely affected the quality of some of that evidence. As it also explains, there are some differences in the accounts given.
	I set out the essence of the account on which the CPS, having considered the totality of the evidence, has proceeded. On Sunday 24 March 2003, a troop of three Challenger battle tanks, part of the 2nd Royal Tank Regiment, was involved in a road block on the outskirts of Az Zubayr, Iraq, to stop and search vehicles for weapons. Shortly after 6 am, Mr Zaher approached the tanks throwing rocks, first at the tanks and then at Sergeant Roberts, who was standing alone outside his tank. Sergeant Roberts put out his hand, apparently as a signal for Mr Zaher to stop, but he did not do so. Sergeant Roberts drew his pistol and aimed it at Mr Zaher, but although it appears that he fired one shot, the pistol malfunctioned and Mr Zaher continued to approach him, throwing more rocks. Sergeant Roberts apparently tried to clear the jam as Mr Zaher advanced.
	A soldier in one of the tanks opened fire, apparently as warning shots, but Mr Zaher did not stop. Soldiers from two of the tanks then fired a number of shots at Mr Zaher. One of those weapons was set to fire at targets a considerable distance away and was not accurate at close range. Although Mr Zaher was hit and severely injured in the arm, two of the bullets struck Sergeant Roberts in the torso and he fell to the floor, fatally wounded. As soldiers dismounted from the tanks to give assistance to Sergeant Roberts, Mr Zaher got up holding a rock and started towards him again. One soldier who had gone to assist Sergeant Roberts said he feared that Mr Zaher was about to attack again, so he fired his pistol several times and Mr Zaher again fell to the floor. According to some of the soldiers, despite his injuries Mr Zaher again got up to advance on Sergeant Roberts, holding a rock. The soldier who was attending to Sergeant Roberts perceived that Mr Zaher still posed a threat and directed another soldier to shoot Mr Zaher. On this occasion he did not get up. British medical staff attended and Sergeant Roberts and Mr Zaher were declared dead at the scene.
	I now want to turn to the circumstances of the investigation of this case. Shortly after the incident, the Special Investigations Branch of the Royal Military Police—the SIB—undertook an early sudden death criminal investigation and produced a short report. It said that the SIB was unable to examine the scene or gather forensic evidence, although photos of the location were taken five days later. The incident was also investigated by the Army Accident Prevention and Investigation Team to determine whether any immediate steps could be taken to improve systems and procedures.
	On 4 July 2003, the commanding officer of the soldiers involved decided that no further investigation of the incident was needed. This decision followed advice from an Army Legal Services officer who had read the first SIB report. However, subsequently, on 18 July 2003, the head of the SIB concluded that the case had not been fully investigated. He was concerned about gaps in the evidence and, after discussion with the Army Prosecuting Authority, decided to reopen the investigation and seek a second legal opinion on the case.
	Attempts by the head of the SIB to reopen the investigation were resisted by the 1st (United Kingdom) Armoured Division chain of command on the basis of the original legal advice. One issue which loomed large was whether the prosecution would have to establish conclusively at the outset of a trial that Mr Zaher was not a combatant. The head of the SIB also said that if a case were to proceed, soldiers could rely on the defence that they were acting in self-defence under the rules of engagement. In fact, as Article 50 of Protocol 1 to the Geneva Convention of 1977 makes clear, if there is doubt about whether a person is a civilian, that person should be considered to be a civilian.
	On 7 August 2003 a more senior officer of the Army Legal Services unequivocally advised the chain of command that the investigation should be reopened. A further investigation was required because the British soldiers who had fired shots during the incident had not been interviewed under caution; witness statements had not been taken from the American soldiers or the Iraqi witness; a further ballistics investigation was required to ascertain which soldiers had fired shots; and there had been no post mortem of Mr Zaher's body.
	The chain of command continued to receive conflicting advice from the Army Legal Services, but on 11 September 2003 the chain of command agreed with the head of the SIB that there should be a further criminal investigation. This was on the understanding that the British soldiers involved in the incident would not be interviewed under caution at that stage. In February 2004, the chain of command received additional advice from the senior Army Legal Services lawyer on whether Mr Zaher was to be regarded as a civilian or a combatant. Also in February 2004, the chain of command agreed that the SIB should continue its investigation in the most appropriate way according to its professional judgment. Soldiers who had been at the incident were then interviewed under caution by the SIB.
	On 3 August 2004 the head of the Army Prosecuting Authority wrote to me, as the superintending Minister of both the APA and the Crown Prosecution Service, advising that this case should be dealt with in the civil jurisdiction. The military and UK civilian courts have concurrent jurisdiction over a whole range of serious offences allegedly committed by UK nationals overseas. He was concerned about the considerable time that had elapsed between the incident and the chain of command permitting a full investigation by the SIB.
	I agreed with the head of the Army Prosecuting Authority, after consulting the Director of Public Prosecutions, that the case should be transferred to the civilian jurisdiction. I was concerned that the intervention by the chain of command and the delays in the case could have led to the defence lawyers raising abuse of process arguments, had the soldiers been charged with criminal offences. An acquittal by a military court, following a successful abuse of process argument by the defence, might have been perceived by some as a final act of the military to cover up any possible wrongdoing by the British soldiers involved in the incident. Such perceptions would not have been in the interests of the soldiers and may have damaged the reputation of the military justice system.
	Once the case had been transferred to the civilian jurisdiction in October 2004, the CPS concluded that further investigations were essential and the Metropolitan Police took over the investigation. The Metropolitan Police had to carry out its investigation in the difficult circumstances that prevailed in Iraq. It was during this time that the body of Mr Zaher was exhumed and an autopsy undertaken. The American soldiers were interviewed, a further ballistics report was obtained and efforts began in earnest to discover whether the local population could help the police with their inquiries.
	After the Metropolitan Police had completed its investigation in February 2006, all the available evidence was reviewed by the CPS, following advice from Treasury counsel in March 2006. The CPS, after being satisfied that the Metropolitan Police had completed all the inquiries that could be undertaken, concluded that there was insufficient evidence to convict any of the British soldiers of the deaths of Mr Zaher and Sergeant Roberts. The reason for this was that the evidence of the soldiers involved in the shooting was that Mr Zaher was attacking Sergeant Roberts and they acted to defend him. The conclusion of investigations shows that, while there were inconsistencies in accounts provided by them, British soldiers at the scene who witnessed the incident broadly support this version. The statements provided by the American witnesses and the forensic evidence did not in substance undermine the accounts of the British servicemen. Mr Miz El Subaiyih, the single Iraqi witness, gave a different account of the incident, making no reference to Sergeant Roberts being shot and referring only to the shooting of Mr Zaher.
	I am wholly satisfied that the decision to transfer this exceptional case to the civilian system was the right action to take in the circumstances of the case. I also believe that it would have been better if there had been an earlier and full investigation, as the head of the SIB and the senior advisory lawyer unequivocally recommended. Only after a full investigation had been completed were the prosecutors in a position to make informed decisions. However, I wish to make it abundantly clear that there is no suggestion that the chain of command acted unlawfully.
	The difficulties associated with the initial stages of this case should not detract from the fact that it has now been fully investigated. The full investigation has established that there is no realistic prospect of conviction. I very much regret the stress that any delay must have caused Mrs Roberts, Mr Zaher's relatives, and the soldiers and their families.
	This case has taken a significant period to conclude, but further measures have been put in place to ensure that service cases are better handled in the future. I am assured by my ministerial colleagues that the Ministry of Defence has provided additional resources for investigations in Iraq, including more trained investigators to deal with the more serious offences, and additional clerical support and equipment. In addition, Her Majesty's Inspectorate of Constabulary has begun a thematic inspection of SIB which will report later this year. I have encouraged the service prosecuting authorities to work closely with service investigators to improve the quality of investigations and reduce delay. I have also discussed these issues with the Judge Advocate General, who has introduced new directions hearings which are reducing delay.
	I am pleased to inform the House that the Military Police and the APA prosecutors are now, as a matter of standard practice, working closely together from the outset of investigations in serious cases. One advantage of this approach is that the investigators now receive early legal advice from independent APA prosecutors on the weight of evidence and what further inquiries need to be undertaken before a decision is reached on whether there is sufficient evidence to charge a suspect. This approach, together with a provision in the Armed Forces Bill, will help to avoid the delays that took place in this case. The Bill makes it clear that where the Military Police considers there is sufficient evidence to charge a suspect with a serious criminal offence, the case must be referred to the Director of Service Prosecutions for an independent legal decision.
	Some 100,000 servicemen and women have served on Operation TELIC. Only a very small number have been accused of incidents involving the alleged ill treatment of Iraqi civilians. Where there is an allegation of wrongdoing and supporting evidence following investigation, charges will be brought. Our troops in Iraq continue to perform outstandingly, but they are not above the law.
	My Lords, that concludes the Statement.

Lord Astor of Hever: My Lords, I thank the noble and learned Lord the Attorney-General for coming to the House with this important Statement. We on these Benches are relieved to know that these soldiers will not be facing charges. But we must not forget that a British soldier died in tragic circumstances, and our thoughts and deep sympathy go out to his wife and family. While Sergeant Roberts might not have survived if he had been wearing body armour, his death highlights the lamentable betrayal of our Armed Forces in failing to provide them with sufficient quantities of essential equipment. We should also bear in mind that an Iraqi died in this incident. He, too, had family, and our sympathy goes to them.
	This whole sorry saga has resulted in damaging consequences for the Armed Forces and their morale and has had constitutional ramifications. However, this is not the time for further debate about the basis for the Attorney-General's powers. We will return to this issue when the Armed Forces Bill reaches this House.
	No one in the House excuses criminal acts. Soldiers guilty of misconduct under arms must not be immune from justice. But if justice is to be done, it must be administered to the highest standard and without delay. It is disgraceful that the soldiers of the Royal Tank Regiment have waited more than three years to have their names cleared. These soldiers have been badly let down by authorities responsible for conducting these investigations, both military and civil. For 18 months this case sat with the military jurisdiction. For 18 months it sat with the Crown Prosecution Service. What on earth was happening during this time? What assessment was made of the probability of gathering any reliable evidence from a war zone and the quality of some of that evidence being affected by the passage of time? Will the noble and learned Lord indicate why the CPS, for which he is statutorily responsible, took such a long time to reach the same conclusions as were originally advanced by the chain of command, namely that the soldiers were acting in genuine self-defence?
	The noble and learned Lord has had the opportunity to examine all the papers in each of the military and civilian stages and has therefore always been in a position to know and to assess how this cumulative disaster has built up. Will he therefore tell the House if he regards any one of these contributory delays as avoidable? If he does regard any of them as unacceptable, what action will he take? In debates in this House, and in correspondence with several noble Lords, the noble and learned Lord has placed great reliance on his powers of superintendence. Will he use those powers to reduce these unacceptable delays?
	In correspondence with the former Secretary of State for Defence, the noble and learned Lord expressed concern at the quality of military investigations into a number of incidents. Clearly neither the service police nor the prosecuting authorities were sufficiently funded to perform the duties they were expected to undertake. The noble and learned Lord raised his concerns as long ago as 2004. Given the superintendence powers, can the noble and learned Lord reassure the House that the Royal Military Police are now fully competent to handle investigations in an operational theatre and really are properly funded? If this is the case, does he agree that this will negate the need to transfer any further cases to the civilian jurisdiction?
	Finally, the Attorney-General indicated that one of his reasons for transferring the investigation out of the military jurisdiction was due to the alleged interference from the chain of command. I am therefore delighted that the Statement makes it clear that the chain of command acted lawfully and the integrity of the officers involved is not in doubt.

Lord Thomas of Gresford: My Lords, I declare an interest as having represented paratroopers in a case last October and being currently engaged in another court martial. I also express on behalf of these Benches our relief that the ordeal that the soldiers have undergone over a very lengthy period has now come to an end. However, uppermost in our minds is sympathy for Mrs Samantha Roberts and the family of the deceased sergeant for their loss.
	The Statement revealed some shocking failures on the part of the SIB to carry out absolutely basic things. For example, by August, months after the event, the soldiers had not been interviewed under caution; witness statements had not been taken; there was no ballistics investigation to find out which soldiers had fired the shots; and there had been no post-mortem on the body of Mr Zaher. Unfortunately, this reflects evidence which has been given in the cases to which I have referred.
	Your Lordships will recall that Mrs Roberts released tapes following the death of her husband which indicated that her husband complained of shortages of equipment. He described the shortages as "disgraceful" and said that the supplies to soldiers were a joke. There were many accounts at that time from soldiers serving in the field in Iraq of their having to buy equipment themselves.
	The Ministry of Defence's report into this matter found that Sergeant Roberts would have survived if he had had the tough ceramic plates which he should have had in his flak jacket. It is surprising to discover that that flak jacket has been destroyed. The reason given by the Ministry of Defence is the potentially hazardous nature of bloodstains. In every murder case, there is always some clothing which is bloodstained and it is handled normally. It is not necessary to destroy important evidence, but the flak jacket of Sergeant Roberts which should have contained those ceramic plates was destroyed. Sergeant Roberts had been ordered to hand over the ceramic plates to another soldier because his regiment did not have enough of them; they had not been supplied with them.
	The Ministry of Defence has admitted liability for negligence in a case brought by the family. If an employee of a company were ordered to hand over protective equipment to another person and the employee were then killed or seriously injured, undoubtedly that company would be prosecuted by the Health and Safety Executive. No political responsibility for these equipment failures in Iraq has been accepted. Mrs Roberts called on Mr Hoon, who apologised personally to her, to resign, but of course he did not do so.
	The CPS guidelines on involuntary manslaughter by gross negligence require the CPS, when considering an offence of that nature, to apply four tests. Did the defendant—in that instance, it is the controlling mind of the organisation—owe a duty of care towards the victim who has died? Did the Ministry of Defence owe a duty of care towards Sergeant Roberts? The answer must unequivocally be "yes". If so, has the defendant breached that duty of care? It has admitted liability. Has such breach caused the victim's death? The guidelines state that the law of negligence must be applied to ascertain whether there has been a breach of that duty. It is admitted. The final test is: if so, was that breach of duty so bad as to amount when viewed objectively to gross negligence warranting a criminal conviction?
	Now that the soldiers have been properly relieved of responsibility for this, what about the Ministry of Defence and its equipment failures? Has any consideration been given to applying the guidelines of the CPS to those failures? If political responsibility cannot be taken by Mr Hoon by his resigning—and that is a feature of this Government—what about the criminal responsibility of those who sent our troops into a dangerous field of war with inadequate equipment?

Lord Goldsmith: My Lords, I am grateful to the noble Lord, Lord Astor, for his welcome for this Statement. I thought that it was right to come to the House to explain, and to explain as fully as I have sought to do, the circumstances, because of the interest that they have already garnered. I welcome the sympathy that he has expressed, which of course I share, particularly to Mrs Roberts.
	The noble Lords, Lord Astor and Lord Thomas, who also expressed sympathy, both referred to the protective equipment issued. It is, of course, a fact that Sergeant Roberts was not wearing an inserted Kevlar plate, or plates, at the time of the incident. That, of course, is a matter for the Ministry of Defence, as both noble Lords would accept. The noble Lord, Lord Thomas, referred to the legal action that is already taking place. I do not therefore propose to say anything more about that aspect, save to respond to the noble Lord's question. As I understood it, he raised the question of the potential criminal responsibility of the Ministry of Defence. The Ministry of Defence is not, of course, a corporate body in any event and, because of Crown immunity, it would not in any event be subject to the sort of offence that he raises. That is a preliminary issue before one ever gets into further consideration—and I am not going to do that on my feet, or respond on the particular issues that he raised. He is absolutely right to say that what has been considered has been the potential criminal responsibility of the soldiers involved, and that has been dealt with.
	Questions have been raised about the time taken to reach this conclusion. As I made clear in the Statement, I personally very much regret that. There are a number of reasons why that is so, including the fact that because of differences of view—let me put it no higher than that—a full investigation by the SIB, including the sort of elements that the noble Lord, Lord Thomas, refers to, did not initially take place. As I said in my Statement, it would have been much better had it done so, although I do not regard the chain of command as having acted unlawfully in having taken the view that it did. I believe that in this sort of incident, because two people died in obviously difficult circumstances, it would have been right to have a full investigation, so that proper conclusions could be reached.
	I have also been asked what steps are being taken to deal with two matters. First, in relation to the ability of the SIB of the Royal Military Police to deal with complicated investigations of this kind, I refer the House to what I said in my Statement. The noble Lord, Lord Astor, asked me whether, as superintending Minister, I could give an assurance to the House about the quality of the investigators. I am not responsible for the investigators—neither the military nor the civilian investigators. That remains, in the case of the military investigators, a matter for the Ministry of Defence. My superintending authority extends only to the prosecuting authority, but I am assured by my colleagues, with whom I have discussed this matter, as I said in my Statement, that additional resources have been provided. Moreover, Her Majesty's Inspectorate of Constabulary has begun a thematic inspection of the SIB, which will report later this year. I personally very much welcome that, as it will enable an objective professional evaluation to be made of what the position is.
	As for delay more generally, I indicated in my Statement a number of steps that are in progress, which I believe will reduce delay. In this particular instance, the initial decision not to allow a full investigation, the delay in then getting that resolved, and the difficulties that the Metropolitan Police had in conducting their inquiries, have all contributed to a delay which, overall, I do not ever want to see again in a case such as this one. We must work hard to ensure that that is so.
	I hope that that covers essentially the questions raised by both noble Lords. I thank them otherwise for the comments that they have made.

Lord Garden: My Lords, I share with all who have spoken so far the horror at the delays that have been caused. We have heard a detailed explanation of those delays from the noble and learned Lord the Attorney-General. There is a very adverse effect on the families of the soldiers, the soldiers themselves, the families of both of those killed and indeed on general Army morale when these things go on for so long. I therefore welcome the assurances which the noble and learned Lord has given us that the Ministry of Defence is putting in new resources. However, he is slightly vague on what those changes are. I am pleased to see that the noble Lord, Lord Drayson, is in his place, because I assume that in order to put together these new extra requirements there was a joint study of some sort between the two departments. I think it would be useful if your Lordships could see in the Library of the House a copy of that review along with the assurances that the noble and learned Lord the Attorney-General has had from the Ministry of Defence.
	I draw attention to the issue of how the Royal Military Police are to relate to Her Majesty's Inspectorate of Constabulary. This is a familiar refrain, in that we talked about it last week in the context of the Blake review into the Deepcut inquiry. Recommendation 24 of that review suggested that the RMP should be formally brought under HMIC. Does the noble and learned Lord the Attorney-General believe that that should be done and done forthwith? Could he also explain what a "thematic" inspection is? It is not a term that I understand.
	I would like a slightly more detailed assurance from the noble and learned Lord. I realise he cannot spell it out today, but in some way we need to know what the Ministry of Defence has told him it is going to do, so that we may be assured that it does it.

Lord Goldsmith: My Lords, my colleagues, including the noble Lord, Lord Drayson, who sits beside my noble friend, will note carefully what the noble Lord has said. There was not a joint study between the two departments, so there is not one to put in the Library. However, I very much welcome the fact that Her Majesty's Inspectorate of Constabulary has begun its thematic review. I understand that term to mean a review particularly looking into the ability of the SIB to deal with all the sorts of cases that are put to it, as opposed to a more general inspection of the Royal Military Police as a whole. It may be that at a later stage my colleagues will be in a position to give more detail about the terms of reference of that, which will help.
	I am sure the noble Lord makes an important point about future inspection. The arrangements for criminal justice inspection will be changing as a result of the Government's decision, but in the civilian field the existing inspectorates will be brought together as part of a single criminal justice inspectorate. That provides an opportunity also to consider, at least from my department's point of view, what form of inspection should take place with regard to the prosecutors. I suspect that the Armed Forces Bill will provide an opportunity for consideration of that as well.

Baroness Park of Monmouth: My Lords, I ask the noble and learned Lord for clarification. I read on page 4 of the Statement that the question was whether Mr Zaher might have been a combatant, and if that had been the case the soldiers could have appealed to the rules of engagement. It goes on to say that under the Geneva Convention,
	"if there is doubt about whether a person is a civilian, that person should be considered to be a civilian".
	But does not the question arise of whether, in the present situation, civilians are in fact combatants? I cannot see that it is in any way possible to say that people who attack the Army and attempt to do it harm are not combatants and therefore must be treated in that way. I would like clarification on that. Secondly, I point out the somewhat contentious issue that the Treasury, rather than the MoD, should be in the dock for the lack of equipment.

Lord Goldsmith: My Lords, I will not comment on the last point; I note what the noble Baroness said. The position on the rules of engagement and international law—whether applied directly as a result of the convention or as a result of its application through customary law—is that in a warlike situation it is permissible to use any degree of force against combatants. In relation to those who are wearing uniform, that is a straightforward issue. In relation to those who are not in uniform, difficult questions can arise as to whether they are irregular combatants, whether they are civilians who are at that point taking part in hostilities, or whether they are there in a different position. Once they stop taking part in hostilities, they are subject to the rules that apply to civilians.
	It was clear that the soldiers in this case were entitled to use force in defence of Sergeant Roberts, but that would be subject to the requirement that it should be necessary and reasonable; or at least that they should honestly have believed it to be reasonable. Given that the prosecution has reached a conclusion on the evidence that it would not be possible to prove that they did not believe that honestly, the question of—and there were two views about this—whether on this occasion Mr Zaher was acting as a combatant or had stepped outside his civilian role does not need to be determined.

Earl Attlee: My Lords, I remind the House that I have an interest as a serving TA officer. Is the noble and learned Lord aware that I still have absolutely no confidence that I would be promptly or fairly dealt with if I were on an operation and I had to engage the enemy? How many servicemen were being considered for prosecution? What numbers were involved? Op TELIC was of questionable legality and necessity; I do not expect the noble and learned Lord to respond on that point.
	I do not believe that the Secretary of State has any direct responsibility for the lack of body armour. If Sergeant Roberts's pistol had not failed, we would not be here this afternoon. When did the autopsy on Mr Zaher take place? Most importantly, does the noble and learned Lord believe that Mr Zaher was of sound mind? It does not sound as though he was. If it took nearly 12 months for the chain of command and Army Legal Services to determine whether Mr Zaher was a combatant or a civilian, why do the members of the Armed Forces get only as many seconds to make that determination? Is it correct that the Strategic Defence Review cut a Royal Military Police TA unit that was full of experienced Metropolitan Police officers who were well used to investigating very serious criminal offences?

Lord Goldsmith: My Lords, I am aware of the noble Earl's views on whether he would have confidence because he has expressed them on other occasions. I completely disagree with him, as he knows. We discussed this at some length during a previous debate on this subject. If anything, this demonstrates that there needs to be, and there will be, as the noble Lord, Lord Astor, said, a fair and independent investigation that will reach a conclusion. British soldiers and British service men and women should and can expect, and will receive, a just consideration of their cases by those who have responsibility. They can rely on that. I will comment on the noble Earl's remark about questionable legality. As he would anticipate, I absolutely disagree with him on that, but this is not the occasion for further debate on that subject.
	The autopsy on Mr Zaher took place during the investigations by the Metropolitan Police at least two years after the event, although I do not have the precise date in front of me. That meant that the autopsy could not be as it would have been had it taken place immediately afterwards, for reasons that I could go into if necessary. I have absolutely no view, nor could I have any view, about Mr Zaher's mental state. A road block was taking place; I cannot say what his motives were, and it is not necessary for the purpose of my Statement.
	I disagree with the way that the noble Earl put his question about determination of the status of Mr Zaher. It was not so much that it took the SIB and the chain of command a year to determine his status, but that there was a debate about whether a full investigation was needed. That took quite a time to determine. I am sure that there should have been a full investigation, because that is the way we can have confidence that things have been properly investigated and looked at. I have made other comments in relation to that.
	The soldier has every right to use reasonable force in self-defence, whoever is the perceived attacker, civilian or not. That is not the issue. But the Geneva Convention provides that guidance, as, indeed, do the rules of engagement. If it is not clear that someone is a combatant, they should be treated as a civilian—use force in self-defence, but go no further than that.

Lord Campbell of Alloway: My Lords, is it not now apparent that one and a half years' delay was occasioned by the decision of the noble and learned Lord to ordain that this trial should ensue under the civil jurisdiction? Was not that decision taken on a wholly mistaken premise that the chain of command had in some way, or would in some way, interfere, and for that reason this case was referred? As I understand it, and perhaps the noble and learned Lord can confirm, no other reason existed for his decision to transfer this to the Old Bailey.

Lord Goldsmith: No, my Lords, I am absolutely satisfied that the decision to transfer this case was right, because the chain of command had intervened to prevent a full military investigation for quite some time. That, coupled with the delay, meant that there was likely to be an abuse of process application if there had been a military trial. That could have been seen, had there been a successful abuse of process, as a military cover-up, if a military jury had done what the senior military people had attempted to do during the investigation; that would have become apparent, because it would have been disclosed. I regret that it was necessary. It is not something that I do, except in exceptional circumstances, but I believed that it was the right thing to do.

Lord Campbell of Alloway: My Lords, to say in the Chamber that there was a fear of a military cover-up by the chain of command is a very serious allegation. That was the mistaken basis on which resort was taken to have this matter tried at the Old Bailey.

Lord Goldsmith: My Lords, the material has become public knowledge, because it was disclosed during a legal action by the Ministry of Defence, although it was never intended to be disclosed. I said that there was evidence that could appear to show a concerted decision by the chain of command to prevent a full investigation. There is no doubt that there was a decision not to allow a full investigation. I do not believe that it was the right decision; it was right that there should be a full investigation. As I have said, I do not believe that that was unlawful, but in the interests of the military justice system, and the justice system as a whole, it was right to transfer this case from the military system. It has not reached the Old Bailey because it has been fully investigated. We can see the results of the investigation and no one can say that it has not been fully investigated. A considered, objective and independent view has been taken that these soldiers should not stand trial for anything. I welcome that, and I should imagine that the noble Lord does, too.

Earl Attlee: My Lords, the noble and learned Lord gave extremely good answers to many of my questions, but he did not say how many servicemen were being investigated.

Lord Goldsmith: My Lords, the noble Earl is quite right; I apologise for that. The statistics are these. More than 80,000 members of the British Armed Forces have served in Iraq. There have been 184 investigations since the start of operations in Iraq—that covers all types of incidents—100 of those relate to incidents where British forces were fired on by insurgents and returned fire; 164 investigations were closed with no further action; two investigations are still with the service police; five are awaiting trial; one is being considered by the chain of command; five are with prosecuting authorities; three cases have been dealt with summarily by a commanding officer; and five cases have been dealt with by the courts. Those figures were correct as of 7 November 2005; plainly, they have moved to some extent since then, but the broad ball park that very few cases have resulted in a determination to prosecute remains the case.

Earl Attlee: My Lords, I am very grateful to the noble and learned Lord but the question related to the number of servicemen involved in the Az Zubayr case with Sergeant Roberts—not globally—being investigated for that case.

Lord Goldsmith: My Lords, I am sorry, I misunderstood the noble Earl's question. No soldiers will be prosecuted as a result of that event, as I made clear in the Statement. I hope that that deals with the noble Earl's question. Is he asking how many soldiers were involved in the incident? A number of soldiers and two tanks were involved and a number of soldiers were interviewed under caution. Does the noble Earl want the precise number of those who were interviewed under caution? Is that the question?

Universities: Research and Development

Lord Patten of Barnes: rose to call attention to the role of British and other European universities in the promotion of research and development; and to move for Papers.
	My Lords, I should confess at the outset of this very welcome debate—I am glad that so many noble Lords are taking part in it—that I open it as a sort of serial Chancellor. Previously I was a European Commissioner and attended the European Council meeting in Lisbon six years ago, which produced the eponymous strategy for turning Europe into the most dynamic and competitive economy in the world by 2010. I hope that no noble Lord is holding his or her breath.
	It would be wrong to argue that nothing has been achieved and charitable, perhaps, to note that achievements have been attenuated and patchy. In some areas that is wholly understandable; countries, individual and elected governments have difficulties with labour market issues, questions of energy liberalisation and so on. However, I find it inexplicable that we have made so little progress in investment in research and development and in higher education. It is extremely important to see the two together and not to discuss them as though they were different planets because universities remain the most important incubators of research in our society.
	We often talk about living in a knowledge-based economy—a curious cliché because I cannot, off-hand, recall any ignorance-based economies—and there is obviously some truth in it. On day one of O-level economics we all learnt that the principal determinants of productivity and economic growth were land, labour and capital. We know today that principal determinants of productivity are knowledge and information. We also know that, increasingly, we face competition not from low-skill, low-cost economies, but from high-skill, low-cost economies. A few weeks ago I spent an extremely educational day on the Infosys campus in Bangalore, seeing 14,000 young Indian software engineers, who are much more of a threat to our competitiveness than Polish plumbers.
	The great distinguished educational economist of higher education Alison Wolf, probably one of the very few economists to argue with passion the liberal case for investment in universities and higher education, also argues perfectly reasonably that there is no mechanistic relationship between the amount spent on universities, the amount invested in university R&D, the amount invested in the expansion of universities and subsequent economic growth. That is true. It is equally true that in the corporate world there is not always a direct relationship between investment in R&D and innovation. Wal-Mart and Tesco are clearly not great investors in R&D but are considerable innovators. But among the higher-value-added, higher-tech companies, such as Nokia and GlaxoSmithKline, the position is completely different. It is also salutary to look at the share portfolios of research-intensive industries to see how they outperform companies in which less research is undertaken.
	What is true of the corporate world is also, by and large, true of countries. Whether you look at the United States or Korea, it has been the story of the past few years. Our problem in Europe is largely the aggregate of problems in individual countries, and the principal issue is that we simply do not spend enough on our universities. That was true under the government of whom I was a small and insignificant part, just as it is true today. In this country, we funded the welcome and substantial expansion of higher education by reducing our investment in every student. The Treasury calls that "higher productivity in universities". What that means is depressed salaries, degraded facilities—libraries and laboratories—and, in many cases, a debased learning experience, with the acquisition of a university degree seen all too often as a rite of passage and the acquisition of a credit to get a job.
	The best way of looking at the problem is to turn up the latest OECD statistics for investment in higher education in developed countries. What do you see? In this country, we spend 1.1 per cent of GDP on higher education. The same figure applies in France and Germany and it is the European Union average. The United States spends 2.6 per cent of GDP. We sometimes kid ourselves that that is entirely because of the huge endowments that American universities have and because they charge tuition fees. It is interesting to note the amount that the taxpayer in the United States invests in higher education. Taxpayers in America spend more on higher education as a proportion of GDP than those in France and Germany and considerably more than taxpayers in this country. So while of course the size of endowments matters, and only two European universities—guess which ones—would get into the top 150 in the United States in terms of private endowment, one should not overlook the fact that the American taxpayer is also doing more than we are.
	The OECD has produced an extremely good little booklet on the educational aspects of the Lisbon strategy. I commend it to noble Lords. It includes the following sentence, which I am afraid goes right to the heart of the problem that we face in the European Union and the United Kingdom. The OECD points out that most European countries,
	"are holding back their universities by neither making the required public investment nor allowing universities to charge tuition fees".
	You have to do one or the other—preferably both—because the alternative is that our universities will continue to fall further behind those in the United States, and we will find ourselves overtaken by the increasingly prestigious institutes of technology in India and the elite universities in which the Chinese are now investing so much money.
	There are two comparators worth looking at to see how much we must do, and how serious the problem is in Europe and this country. First, two international league tables are often referred to, both of whose methodologies are questioned—one, the Shanghai Jaio Tong, with more reason than the other, the Times Higher Education Supplement. Looking at the attempts at producing an objective assessment of what universities are doing, taking into account, among other things, research impact, the Shanghai list has two European universities in the world's top 10, and nine in the top 50—none German. The Times Higher Education Supplement has three European universities in the top 10—one French—and 11 EU universities in the top 50. That is slightly better. The first German university in the list is Heidelberg, at number 45.
	I mention German universities because the great American research universities were based on the German Humboldt model. It is a weakness for Europe that German universities have fallen back in these league tables. They demonstrate that we probably have much the best university system in the EU, and probably still the second best in the world. But we used to have the best, and we will not be able to hang on to second place unless we recognise that, in many European universities—and many British ones—there is not much petrol left in the tank.
	The Chancellor, whose interest in higher education and research is absolutely genuine, is obviously impressed by American universities. I have just been in America, on eight or nine campuses in the past month. The main problem for the president or provost of an American university is how to spend the money. The main problem for the vice-chancellor of a British university is where the money will come from. We should recognise that that has consequences, and I come to one directly: Nobel prizes.
	In the first 30 years of the last century, French, British and German nationals won far more Nobel prizes in science and economics than America, which won 3 per cent of the total. Since 1970, America has won 60 per cent more than the whole of Europe combined. Our figures for the past few years look a bit better if you count the European academics who have done their research in America, but that is just an indication of the talent we are losing.
	If you ask, "What's it going to be like in a few years' time?" I can tell you. A few months ago, I chaired the panel proposing the names for the governing council of the European Research Council. One of the figures which most alarmed me showed that, a decade ago, half the young Europeans who went to America to do PhDs came back to Europe. The latest figure showed that a quarter came back to Europe. That is the reality.
	Most of the problems must be addressed by national governments. Some things could be done at the European level. The European Commission should do a lot more to look at individual countries' performance and scoreboard it. There should be a much bigger push on both the Bologna process and the attempt, at long last, to agree on a European patent, the absence of which is hugely costly for our innovators and inventors.
	I have three more points. First, we must ensure that the European Research Council, which is being established as a European version of the US National Science Foundation, is properly funded. Secondly, I hope that we can forget this idea of establishing a European institute of technology. It is an entirely half-baked idea, the result of somebody going to MIT and being impressed; that is not surprising—it is an extremely impressive higher education institution. However, while we are not sure whether a European institute of technology would be virtual, real, a networking or clusters, we know that a number of Members of the European Parliament are keen on it because they want to see an institute established in Strasbourg so that they can scarper back to Brussels. I rather sympathise with that, but it is not a good basis for establishing a new institute of technology. We also know that it is pretty insulting to the European institutions competing with the Massachusetts Institute of Technology, who could do so a lot better if they were as well funded. Also, if we go ahead with this—as I politely said—half-baked idea, it will inevitably take money from a limited research budget away from the European Research Council.
	Finally, the Prime Minister made an extremely good speech in the European Parliament last July, arguing that we should shift resources from the priorities of the 1950s and 1960s—the common agricultural policy and structural funds—and concentrate them on the priorities of a new century: competition, R&D, economic growth and the creation of jobs. The Sapir report had said this to the Commission in 2003. We fetched up, at the end of our presidency, agreeing to a budget in which we see a squeeze on R&D spending and an increase in spending on the common agricultural policy between now and 2013, from 40 to 44 per cent of the total budget.
	I guess, by and large, it was better to have a deal than no deal. But one must question the tactics by which the Prime Minister did not fight the deal between the French and the Germans in 2002 because he was worried that they might block enlargement, but instead chose to fight in 2005 on the much weaker ground of our own budget rebate. That was tactically extremely unwise, and has left us with a lousy budget settlement for growth and economic prospects for the next few years.
	I welcome this debate. I hope that this House can continue to blow the trumpet about the importance of higher education and R&D in this country and in Europe as a whole; and I hope that somebody out there will listen. I beg to move for Papers.

Lord Giddens: My Lords, I congratulate the noble Lord, Lord Patten of Barnes, on having initiated this debate and on having persuaded such an amazing number of noble Lords to contribute. Could this be the debate of the year? We will see.
	In Beijing, the Zhongguancun Science Park, which is in the academic district of Haidian, contains 68 universities and 213 research institutions, including the two most prestigious universities: Tsinghua and Beijing. Many international companies have located enterprises there, including Microsoft and Intel. This development, which goes along with those in India mentioned by the noble Lord, Lord Patten, marks a tremendous shift in the world economy. Many still think that China competes on the basis of low-grade manufacturing goods which get their competitiveness from the cheapness of their production. This is now completely wrong.
	Two American economists have a good way of portraying this: Schott—a somewhat unfortunate name—and Barnard. They have a kind of coloured triangle thing, which they use, first, to refer to the American economy in the early 1980s in relation to Chinese industries competing with American ones. When the triangle is blue, it means that the competition affects only low-grade manufacturing industries. As it turns red and orange, it means that the Chinese are competing with higher-grade industries, including knowledge-based and high-technology goods. It is amazing how that triangle changed over a period of no more than about 12 years, from the early 1980s to the mid-point of the 1990s. It all shifts towards the red and most of it shifts towards the orange, showing that the Chinese economy is competitive in something like 75 per cent of American industrial sectors. At the moment, the Chinese economy is targeting pharmaceutical industries. This is a massive shift in the competitive nature of the world economy. As the noble Lord said, it goes along with tremendous investments in higher education and technology in China and in India.
	It is to the Government's credit that they have recognised that and the importance of reacting to it, especially with the 10-year science and innovation investment framework. I was also impressed with two Treasury documents produced about two years ago: Long-term global economic challenges and opportunities for the UK and Long-term global economic challenges and opportunities for Europe. According to the 10-year framework, investment in research and development should reach 2.5 per cent of GDP by 2014. The current level is pretty low—only 1.9 per cent.
	I am pleased to say that the report recognises the point that the noble Lord, Lord Patten, made about the strength of British universities. In spite of what is said about universities being so shabby and people so poorly paid, the impact of British universities has been remarkable, especially in European terms, but also in world terms. As the report says, the UK ranks second to the US in research excellence measured by citations in scientific subjects. My noble friend Lord Sainsbury has been an excellent science Minister. Anyone who has worked in universities will know him to be energetic and innovative. The Lisbon agenda initially proposed that 3 per cent of the GDP of EU countries would be spent on R&D by 2010. That estimate has sensibly been revised downwards to 2.2 per cent now; it was 1.9 per cent in 2000.
	I shall make four observations about the relationship between universities' research and development and business, because there are areas where European Union and, to some extent, UK national policy are getting it wrong—some of them were mentioned by the noble Lord, Lord Patten. First, it is doubtful whether European or national targets for research and development have any real economic significance. The reason is the globalisation of research and development, which is visible in the science park in China. Companies will go across the world wherever they can outsource research and development. That means that domestic research and development is likely to have an impact only if it is truly exceptional. There will no longer be much relationship in the global spread of companies between domestic research and development and domestic use of that research and development. That means that it is crucial to support centres of excellence. We can hope to prosper in this area only if we have centres of excellence in world terms in science and technology linked to business. We will not prosper by mediocre research and development in universities.
	Secondly, in the European Union and in the UK, the expansion of research and development is supposed to be driven mostly by companies; that is, by increasing expenditure from business. That is wholly unrealistic. Why should companies spend more on research and development? There are some sectors where it can be shown that research and development affects productivity, but most companies want to reduce the amount that they spend on research and development by outsourcing it. That is why they go in such numbers to China and other countries. It will be difficult to persuade industry to make the contribution to the overall EU target, even the lower one that the Commission has set. The same thing will be true in this country. The only way to counter that is through positive policy, through taxation incentives or other forms of incentive that would motivate companies to locate their research and development in Europe or the UK and to spend a bit more money on it than they might otherwise do.
	Thirdly, a lot of thinking about R&D, including the thinking in the 10-year framework, depends on what I would call an old-style model of science innovation. That model applies historically and to some industries today, such as the pharmaceutical industry, where there is a neat, MIT sort of relationship between a university and a business which feeds straight into the marketplace. But that is not how most innovation works in a modern economy. The noble Lord said something slightly caustic about the idea of a knowledge economy—he said that there was some truth to it—but it is the transformation of our times. A generation ago, about 40 per cent of the labour force worked in manufacture and in some countries more than 10 per cent worked in agriculture. The proportion in manufacture in the EU is now down to 15 per cent; in the UK, it is down to 12 per cent and, in the US, it is down to 10 per cent. The economy is completely different from that of the past. Well over 80 per cent of the labour force has to work in knowledge-based or service occupations. That is the nature of the modern economy. However, innovation in a knowledge-based service economy is not just driven by technology and old-style R&D. There is a terrific difference between innovation in markets and innovation in science. Only when the two are tied together does one get successful products. Look at the iPod: it was based on a technological breakthrough, but its appeal to style and taste, especially of teenagers, marketed it.
	Fourthly, a great deal of innovation and economic success in the new economy will depend not directly on science and technology, which I do not decry in any way, but on responding to changes in taste. Who knew that the British, who drank horrible coffee for such a long while, were harbouring a taste for the really nice coffee provided by Starbucks and other establishments? I am not sure that anybody knew. In the United States, the creative industries now account for 40 per cent of the net growth in the American economy; they depend a bit on science and technology, but that is not their central drive. Finally—

Lord Davies of Oldham: My Lords, I am sorry to interrupt my noble friend, but if every noble Lord goes over time, the Minister will have two minutes to reply to this debate. We must sit down after the seventh minute has been completed. That is seven on the clock. We must sit down at eight.

Lord Giddens: My Lords, I apologise. When I spoke to the Minister yesterday evening, he said that academics tend to go on too much and that is obviously true.

Lord Wallace of Saltaire: My Lords, it is a pleasure to follow my former boss. I pay tribute to the noble Lord, Lord Giddens, for the time that he spent as director of the London School of Economics, when he transformed a rather shabby campus and a series of extremely dirty buildings into a place that was a pleasure to work in. Even more important, he substantially increased the salaries of the professors, for which many of us are extremely grateful.
	I shall start with an apology. For the first time since I entered this House, I am unlikely to be able to stay until the end of the debate. That is because I am speaking at the University of York this evening. I will therefore be extremely brief.
	I wish to make two points. The first is on the regional balance of research and development in Britain. This is a centralised country. The reason why the universities that come highest in global rankings are Oxford, Cambridge, Imperial, University College London, the London School of Economics and King's College London is partly that we are such a centralised country.
	I started my career when I came back from the United States—as not enough of us do—at the University of Manchester. I am extremely glad that the Manchester/UMIST merger has created a major research centre in the north-west. I am glad that the University of Newcastle operates so effectively as a centre for regional regeneration and I welcome the White Rose University Consortium in Yorkshire—it is part of what I am talking about at the University of York this evening—which brings together research capacity within the region. I might also perhaps mention the University of Hull, which, among other things, has contributed more staff members to the Benches of this House than almost any other university in Britain.
	The White Rose University Consortium is crucial to the future of the northern economy. I am glad that the National Science Learning Centre and the Yorkshire research triangle contribute to that. The spillover from university research to business is crucial. Both companies that have their headquarters in Saltaire grew out of the University of Leeds computer and maths departments. That is the way we all must go forward. The co-operation in a knowledge triangle between business and universities cannot be purely national. This is one area in which universities on the Continent, partly because they are linked to regional government—in Barcelona, Baden-Württemberg and Bavaria—have better partners than we yet have in Britain.
	My second point relates to the proposal for a European institute of technology, which is linked to the Lisbon agenda. Again, I must declare a number of interests. My wife has been an employee of the European Research Institution; she was a member of the Sapir report and of the European Commission's advisory council on research framework 6. The communication from the Commission on the European institute of technology says that it is important,
	"Not to be constrained by the boundaries and obstacles which contribute to the fragmentation of European higher education and research today".
	Those obstacles come from within the state orientation of universities in a number of other European countries. I am painfully aware that in Belgium, Spain, Germany and Italy there is deep resistance to international exchange of staff. Universities are caught up with local power structures; universities in the Basque country prefer to appoint Basque academics and those in Catalonia, on the whole, prefer to appoint Catalan academics. We should be using the Bologna process to the full to promote a Europeanisation of universities on the Continent.
	UK universities, as the noble Lord, Lord Patten, pointed out, occupy 11 of the 30 top places in the Times Higher Education Supplement rankings, whereas German universities occupy only two and no Spanish or Italian universities feature at all. So we clearly have a number of difficult interests at stake.
	There are several useful European networks and funding programmes which help us to build closer co-operation among European universities—ERASMUS, Socrates, the Marie Curie network, the European Commission framework programmes for research and now the proposed European research council. I doubt the rationale for a European institute of technology, but we have to recognise that there is considerable weight behind the proposal. Therefore, I urge Her Majesty's Government to push for a virtual network and not for a physical site. The history of European institutions in this area is, after all, not entirely happy. The EURATOM Treaty proposed a European university of technology and set up a number of joint research centres, such as the European University Institute in Florence. Indeed, the final outcome of the proposal was established as a social science institute because it was cheaper and smaller. To establish a physical institute of technology would be very expensive; it would take a substantial chunk of the funds from the Commission's budget and require large additional spending from member states. The cost and size needed for this to be effective would be a major distraction from other priorities.
	So, I urge Her Majesty's Government to engage fully with the Bologna process in building closer links among European universities, such as those that British universities, including the London School of Economics, are actively engaged in establishing. We should support the proposal for a European research council and, on this new proposal, we should press for a virtual network at most, and certainly not something in Strasbourg.

Lord Rees of Ludlow: My Lords, I echo the views expressed by the noble Lord, Lord Patten, about the multifaceted role of universities in the UK and in Europe. I declare an interest as a professor at Cambridge University.
	Enhancing commercial spin-offs from academic research is rightly high on the Government's agenda, and universities like mine are responding. But the most crucial output of a university is high-quality graduates, feeding into the knowledge economy. How well they are taught depends on the quality of the university faculty. Those faculties perform other services. They are trusted sources of expertise over all issues that impinge on public policy, they pursue learning for its own sake and they can assimilate the 95 per cent of research not done in the UK.
	I find it disquieting that academic careers now seem less alluring than they did decades ago. Attracting and retaining outstanding people is hard when they have an enticing range of other career options. It requires a benign research environment, and without an influx of such people our universities will decline. We have a lot to lose. One should be cynical about the spurious precision of these various league tables, but, however you tot up the scores, the UK is way ahead of any country apart from the USA in the quality of our best universities. That is a competitive advantage we should cherish; but it is fragile, for reasons already mentioned by the noble Lord, Lord Patten.
	In particular, maths and the physical sciences are overall in a more precarious state than the biomedical sciences. There is a clear reason for that: the Wellcome Trust, the medical charities and the pharmaceutical industry supplement government funding of biosciences in a manner that has no full parallel for physical scientists. Many economically dominant technologies—from electronics to energy generation—rely on basic physics, chemistry and mathematics. Even in medicine, many advances depend on those subjects.
	Sustained expanding investment is essential, but other things are as well. We need to strengthen collaboration with Europe. There are, as has been said, few world-class universities on mainland Europe. That is partly because much of the best research done there is done outside the university system—by Max-Planck institutes in Germany and by CNRS in France.
	In "big sciences", the UK is already meshed into Europe. We belong to consortia that have been immensely successful. CERN in Geneva—more than 50 years old—is destined to be the world's leading laboratory in particle physics for at least the next 15 years. The European Southern Observatory now undoubtedly has the world's best telescopes. Europe has never had a space programme to match America, but even here the European Space Agency could gain ascendancy if it focused on science, miniaturisation and robotics, leaving NASA to squander its far larger budget on ill conceived grand projects for manned space flight.
	International collaboration is mandatory, of course, in those capital-intensive flagship sciences, but European collaborations are strengthening across the whole of science. There has been a big change during recent decades. As a young researcher 30 years ago, I went to America as a post-doc. That is where I met my European counterparts: they all did the same thing. It is different now. Young scientists are more inclined to migrate within Europe. That is a healthy sign.
	The EU fellowships and network programmes have been effective catalysts. The European Research Council will also be a boost. We owe a debt to the noble Lord, Lord Patten, for his role in endowing it with a board that commands respect and support. The ERC should strengthen the leading European universities. That is indeed far better than setting up a new institute of technology.
	We in Europe fret about competition from the US but, as the noble Lord, Lord Giddens, emphasised, the Americans themselves should be anxious about the long-term challenge from China and India. In fact, a committee of the American academies, including the chairman of Intel and other heavyweight figures, recently published a hard-hitting report entitled, Rising above the Gathering Storm. It advocated an urgent programme to attract far more teachers and proposed that all foreign students who graduate in the US should be given expedited green cards to keep them in the country. The committee also recommended increased federal investment in the physical sciences and a new agency to sponsor energy research.
	If the Americans are anxious about long-term competition from the Far East, we should be doubly so. If the UK cannot sustain its competitive edge, we risk a downward spiral and Europe will decline with us. If we can sustain Britain's academic excellence and render this country a magnet for mobile talent, there is a huge upside. Excellence clusters together; talent attracts more talent. That is why our research universities matter and why we should welcome this debate.

Lord Parekh: My Lords, I begin by thanking the noble Lord, Lord Patten of Barnes, for introducing this extremely important and timely debate. I want to introduce a cautionary note. There is an increasing tendency to redefine the nature and role of the university almost entirely in economic terms. We are constantly told that the job of the university is to do research and that the research should aim at producing operational and practical knowledge that contributes to the economic development of the country. The European Council's Lisbon resolution, to which the noble Lord referred, states that the European Union should become,
	"the most competitive and knowledge-based economy in the world",
	and that the primary goal of the university is to help to achieve that.
	Although research oriented towards economic development is an important goal of the university, I shudder to think that it should be the only one. At the end of the day, the university is a deliberative, creative and carefully nurtured centre of reflection. It is a custodian of human civilisation and it is concerned to understand man's predicament and his place in the world. If that is its objective, two things follow. First, teaching is as important as research, because to transmit the available body of knowledge is just as important as to expand it. Secondly, not all expansion of knowledge involves research. What kind of research does the creative writer do? What of artists and philosophers, such as me? I cannot remember sitting in the library doing any kind of research. One's thinking goes on in one's head, sitting in the Chamber, observing people and, eventually, going home and writing about it.
	There is a tendency to think that all knowledge can somehow be fitted into the category of research. That is why, when we compare British universities with American universities, we make a very simple mistake. We look at the league tables—just as we hate league tables here, there is no reason why we should not maintain the same attitude of suspicion towards international league tables—and say how low we are. Let us remember that the league table is based on research as defined in terms of scientific knowledge. If we were to dispense with the category of research and talk in terms of knowledge, I have no doubt that Europe would be at the top of the table. If we consider philosophers, artists, great writers and poets, many American universities—or even the United States as a whole—would not be able to hold up to what is happening in Europe.
	I say that not to stand up for Europe or to stand against the United States, but simply to state that the purpose of the university is far more than to produce scientific research and contribute to economic development. I have been watching that tendency since the late 1970s and early 1980s. That has led to the marginalisation of some very important areas of research in universities. Increasingly, when universities are financially squeezed—my noble friend Lord Giddens can bear me out on this—there has been pressure to squeeze out philosophy, theology, art, literature and classical languages. That is not the way to proceed.
	So, before I talk about the importance of research, I want to put down a marker for other disciplines that cannot be fitted into the category of research. Ultimately, universities should be judged not just by their contribution to research and economic development but by their contribution to the understanding of human civilisation, and given credit for that.
	I turn to research, which, as I said, is certainly one important purpose of the university. Here, the record of European universities is quite impressive but, as the noble Lord, Lord Patten, and others have pointed out, it could be better and is not as good as that of the United States. We need to ask ourselves why that is so. In my view, research ultimately depends on five important factors. First, it requires funding. Secondly, it requires talented people who are prepared to opt for research rather than other things. Thirdly, it requires academics to have free time to concentrate on research rather than being cluttered with administration, teaching and other things. Fourthly, it requires imaginative exploration of new areas; and, fifthly, it requires absence of bureaucratic rigidity. I submit that those five factors ultimately decide the quality of research available in any country. I say that as an ex-vice-chancellor and as someone who has been involved in observing how research is done.
	Before I run out of time, let me say something briefly, not about all of those five factors, but about two or three important ones. Let us take funding. First, European universities spend 1.1 per cent of gross domestic product, as opposed to 2.6 per cent in the United States. Secondly, in the United States, funding is concentrated in some universities. There are 4,000 institutions of higher education, but only 550 award doctorates, of which only 125 are research universities. Of them, only 50 have 80 per cent of the research talent available. Thirdly, industry contributes a large amount of money in the United States—$2.3 billion, compared to $920 million in European universities, although the population is roughly the same. Fourthly, the United States has more foundations than we have and its institutions have a skilful way of getting money out of their alumni—I saw that very clearly when I was a professor at Harvard—whereas our universities have great problems struggling to get such money. It is therefore important that there should be greater collaboration between universities and industry.
	Secondly, do talented people opt for research? Sadly, in European universities, they do not; in the United States, they do. We produce roughly the same number of science and technology graduates as the United States, yet we have roughly one third of the number engaged in research in the United States. How do we explain that gap? We can explain it in two ways. First, there are very few research jobs in universities. Because industry does not concentrate on research and development, there are no jobs in industry either where graduate students could go. In the United States, 83 per cent of postdoctoral fellows are absorbed in business or industry. In Japan, the figure is 66 per cent. In Europe, it is just under 50 per cent. It is also important to bear in mind that European universities are very heavily dependent on overseas students. In our country, 37 per cent of 104,000 postgraduates are from overseas, and that number will decline as India and China begin to develop their own centres of excellence.
	I have one last point to make, and then I shall stop. When it comes to genuine research of the kind that the noble Lord, Lord Giddens, and others were talking about, we need to break away from disciplinary boundaries. Indeed, we need not only interdisciplinary research, which is as far as European universities seem to have got, but trans-disciplinary research in which we begin to create and to put together new ways of looking at things, and not only across different boundaries. We are an old continent and universities have got stuck in rigid modes, so we have not really explored the possibility of new kinds of trans-disciplinary approaches. Harvard, for example, has a wonderful centre for genomics and proteonics, which I saw when I was there. It draws in physicists, biologists and professors of chemistry and mathematics with a view to studying the structure of biologically relevant macromolecules. Something like this would be relatively unthinkable in many European universities.
	These are some of the issues that we need to address if we want European universities to be even better than American universities, not simply equal to them, and, more importantly, if we want them to be true to their own tradition.

Lord Norton of Louth: My Lords, I, too, congratulate my noble friend Lord Patten of Barnes on securing this important debate. I declare an interest as an academic, and I am delighted to follow the noble Lord, Lord Parekh, a former colleague in the politics department at Hull University.
	We have had a number of debates on the role of universities recently. One of the points I have made in debate is that it is important to look at universities holistically. There is a tendency, which is becoming more marked, to look in a highly compartmentalised way at what universities do. We recently discussed the research assessment exercise. Doubts were raised about the use of a metrics-based method of assessment to succeed the 2008 RAE. The Higher Education Policy Institute has published a valuable report today on the use of metrics. It identifies several potential disadvantages, not least the likely concentration on the pursuit of research grants in preference to other research and scholarly activity. There are obvious dangers in focusing on inputs at the expense of outputs. There is also the danger, as the report notes, of turning research into a stand-alone activity. This is the point I wish to develop.
	Universities make a massive contribution to research and development. That contribution is both direct and indirect. The direct contribution comes from research undertaken by universities. It is substantial and its international impact is growing. Universities UK has provided compelling data to demonstrate the extent to which British universities are increasingly at the forefront of research. There is growing collaboration between universities and the business community. Some years ago, only one university was a member of the CBI. Today, 40 universities are members. As the Lambert review acknowledged, universities are working hard to transfer knowledge to the business community.
	It is vital that we continue to support research undertaken in our universities, and I endorse the concerns variously expressed about greater selectivity in the allocation of research funding. We need a diverse research base in order to encourage innovation. As the report published by Universities UK in 2003 pointed out, there is no clear evidence that the UK's research performance will benefit from a further concentration of research funding. As it and the CMU Universities Group have argued, a further concentration will risk exacerbating existing regional differences in research capacity and performance. However, I wish to emphasise the indirect contribution that universities make to wealth creation and, in doing so, reinforce what the noble Lord, Lord Parekh, has said so cogently. There is the danger of focusing exclusively on the direct contribution made to measurable research undertaken in British universities. That neglects the contribution made through teaching. I have always argued that research and teaching are complementary pursuits. That is true not only of the enhancement of the student experience, but of the contribution made to this nation's wealth creation.
	Not only universities engage in research and development—as we have heard, so, too, do businesses and research institutes. But where do they draw their researchers from? Equally importantly, from where do they draw their senior managers—those who will decide the research strategy? The quality of R&D in this country derives in large part from the quality of graduates that our universities produce. Some high-fliers stay in the academic community; others go out to work in companies and research institutes. Universities produce the researchers and, increasingly, the company leaders. The number of graduates at senior management level in the United Kingdom used to lag noticeably behind that of major competitors such as the USA and Japan. We have made great strides in narrowing the gap but, as the noble Lord, Lord Parekh, has just said, there is still a gap.
	There is thus a danger in making research and teaching discrete, stand-alone activities. We need to recognise their complementary nature. We must beware, therefore, the tendency, reflected in the 2006–07 HEFCE financial settlement, of favouring research at the expense of teaching. We must also beware moves towards teaching-only universities. We already have teaching-only institutions; they are called schools and colleges. Higher education must comprise teaching and research as integral and inseparably related components. So we need to avoid the compartmentalisation of research and teaching.
	We also need to avoid the compartmentalisation of the sciences and the non-sciences; again, I reinforce the point made by the noble Lord, Lord Parekh. One of the worrying aspects of the recent Next Steps document on the future of the RAE was the extent to which it appeared to be science-driven. This was reflected in the very nature of the document in which the discussion was contained, as well as in the emphasis on metrics. Metrics are not necessarily suited to the arts and the social sciences. Separate methods of assessment may therefore be necessary. One of the problems to which I drew attention in our recent debate was that of assessing interdisciplinary research. The point I wish to make in the context of today's debate is that R&D is not the exclusive preserve of those in the sciences. Those trained in the non-sciences can play as important a role in leadership and the recognition of important entrepreneurial ideas as those in the sciences. Senior managers, those sitting in boardrooms and, as the noble Lord, Lord Giddens, said, those responsible for innovation in marketing are not necessarily science graduates.
	These are very basic and fairly straightforward points. They do, however, have significant implications both for the allocation of research funding across the HE sector and for the way in which we fund both teaching and research. They also have important implications for discussing the structure of degrees, not least the idea, variously and recently floated, of moving to two-year degrees. What I have said raises serious doubts about the implications of such a move for our research base. Short-term benefits may be gained at the long-term expense of our capacity to create wealth.
	I conclude as I began. We need to look at universities holistically. Compartmentalisation may generate problems for the future health of our universities and our international competitiveness. We need to see the links. Perhaps that is the value of a contribution from a social scientist.

Baroness Thomas of Walliswood: My Lords, having listened to the speakers so far, and looking at the list ahead of me, I am not quite sure how I have the courage to speak in this debate at all. I do so because I thought it might be of use to the House if I were to describe how far the Commission's proposals for a European institute of technology have been scrutinised up to now in your Lordships' House. Sub-Committee G of the EU Select Committee, which I chair, first looked at the proposals last month. I think it is fair to say that, at first sight, the committee shared the cautious approach to the proposals which the Government seem to have adopted. We were already aware of the doubts expressed in academic circles via the media—doubts that have been reinforced today. I assure the House that if we go ahead with an inquiry, this debate and, I hope, some of the individuals who have taken part in it will be of great importance to us in determining our final response to these interesting proposals.
	Meanwhile, we have today considered in committee a paper that describes the nature and results of the consultation process conducted by the Commission. The consultation process consisted of a web-based multiple-choice questionnaire which at first sight seems to suffer from several major faults. First, the questionnaire assumes that the project will go ahead. There is no question about the overall necessity or value of the proposal. Secondly, the respondents are self-selected and there is no weighting of responses. The views of individuals are given the same weighting as the views of leading institutions. Thirdly, the question does not seem to test what respondents think about the likely effectiveness of the proposed institute or whether the objectives could be achieved in other ways. Therefore, the sub-committee still has no real impression of the practicality of the Commission's approach or what the opportunity costs—a point mentioned by the noble Lord, Lord Patten of Barnes—might be. Meanwhile, we are asking the Government in a letter whether they would like to comment on the validity of this consultation process.
	Perhaps I may end on a personal note. I am becoming increasingly concerned at the number of projects which are being "flagged" or given the Lisbon agenda seal of approval, simply because they have something to do with learning or knowledge or are vaguely connected with the Lisbon agenda. We can all have personal views on the Lisbon agenda, which may be unexceptionable in itself, but the aspirations of that agenda do not seem necessarily to confer automatic acceptability on any and every proposal put before us under that seal of approval. We have to be just as discriminating about those proposals as we are about any others.
	The noble Lord, Lord Patten of Barnes, highlighted the need to use research and development funds wisely and not to endanger the new research institute by funding a rather nebulous additional institute—a European institute of technology. At the very least, European Union action under the Lisbon strategy, like any other European Union action, should be soundly based technically and should add value to work already being done or initiatives already under way in the relevant field of endeavour. As the chairman of a committee, I very often hear such views expressed by the members of my committee. They are views which I share, and I am increasingly coming to feel that they are of immense importance not just to the work of scrutiny but to the work of the European Union itself.

Lord Patel: My Lords, I, too, thank the noble Lord, Lord Patten of Barnes, for initiating this important debate. I declare an interest: I am pleased to say that I am the recently appointed chancellor of the University of Dundee, where I started as an undergraduate more than four decades ago. The University of Dundee is today a premier research-based university, particularly in life sciences, and the winner of the prestigious Queen's Anniversary Prize in 2005.
	The issues that I will raise therefore relate to universities such as Dundee, but they apply equally to other universities. The issues concern how the proposals set out in the science and innovation investment framework and the proposal to merge research-related funding in health are likely to affect universities. One issue for universities such as Dundee, given the nature of its research base, is its high dependency on charity-funded research, which stands at about 45 per cent. Such research funding currently does not carry an overhead.
	While the Government have tried to address that by providing some dual support funding for charity-funded research, it amounts to less than 20 per cent of direct costs. Full economic costing of research, which the Government require universities to achieve by 2010, requires an overhead of the order of 100 to 120 per cent of direct costs. The full economic cost deficiency, therefore, will put some universities in great difficulties in balancing the books for research. The Government need to address that issue before the full impact of economic-costing proposals take effect. Will the Minister therefore clarify whether one of the roles of the proposed new office of charity and third sector finance that the Treasury is proposing to set up will address those issues?
	The second issue relates to proposals to change the RAE process. The points made in the paper are fair. There is wide support for a fresh approach to the RAE. For the more mature science/engineering/medicine area, the argument that metrics-based allocation should constitute the main methodology for funding council dual support is reasonable. But that may not be the case, as the noble Lord, Lord Norton, mentioned, in other disciplines such as the arts and humanities where a form of peer-based review might be more appropriate.
	External research income is clearly likely to be the dominant driver but it is important to know which research income would drive the allocation. There is a strong argument that all sources of research funding—from research councils and commercial and charity sources and so on—should be taken into account. There are clear disadvantages for some universities if the dual-support funding system aligns with OST and research council-funded research income as the main driver. Universities where the research base is strong in areas such as biomedicine and where charity-funded research is a major source of funds would be severely disadvantaged.
	That also has a link with the third issue that I wish to address. It relates to the announcement by the Chancellor in his Budget Statement proposing the merger of the Medical Research Council and NHS research funding to create a large pool of more than £1 billion to fund research across the health sector. The announcement represents a real chance for substantial improvement of the funding arrangement in the United Kingdom, facilitating the interaction between basic and clinical research and leading to efficiency in translation from basic research into health benefits. Direct support for clinical research, as for grant support for universities, could incentivise NHS trusts to seek to end support research.
	While the Government's commitment to the Haldane principle is welcome, it is vital that the new funding arrangements should keep intact the landscape of medical and clinical research, from the most fundamental to the most applied, so as to facilitate the flow of discovery into application. Biomedical research needs interaction with other disciplines.
	I have two questions for the Minister. How will a new governance structure be committed to the principle of independence in daily decision-making in medical research while at the same time increasing the ability of UK science to address the needs of the NHS? Will the new structure be able to review, fine tune and maintain the balance required between funding schemes for research, infrastructure and training and be flexible enough to implement strategy without inflexible ring fencing or complex management structures?
	With the current strength of universities such as Dundee in biomedical and life sciences research we have an opportunity to translate such success into clinical research and health games, but only if the right structures are put in place. I hope that the opportunity will not be missed.

Lord Haskel: My Lords, my first point about research at universities is that it does not really matter where it is done as long as we benefit from it. It really is a part of globalisation and it is one aspect that need not stir unease. Let me give an example. In 1990 Larry Summers wrote a paper at Harvard, in America, arguing that central banks should be independent. New Labour picked this up, introduced it in 1997, and few will deny that it has been of great benefit. Fortunately, the present Chancellor and his team became aware of Larry Summers's work and incorporated it into our policy, but that was more by good luck than good management. In today's world, these things cannot be left to luck, and research needs development.
	It used to be said that we were good at research but poor on development, but that is no longer true. To their credit, during their time in office the Government have carried out a programme of knowledge transfer—and a very impressive programme it is. It started with University Challenge and then moved on to science enterprise centres. Not only were universities encouraged to license, to patent and to do contract research, but funds were also put in place through the Higher Education Innovation Fund for universities to form companies themselves. All this has brought about a huge change in the culture of our universities, a culture of encouraging and speeding up knowledge transfer so that research can be utilised and commercialised in all parts of the economy, wherever it comes from.
	To facilitate that, some industries have set up their own knowledge transfer networks, organising the flow of information from universities and researchers to training organisations, financial institutions and businesses, and a flow of information the other way around, from the shop floor to the university. I declare an interest as the honorary chairman of one such knowledge transfer network, TechniTex. In this way universities and industry add value to each other; industry sets the agenda and universities provide the answers that industry needs. But those answers frequently lie outside a single source of knowledge. As the noble Lord, Lord Broers, said in his Reith Lectures last year, to make more progress and succeed in innovation nowadays, you need a matrix of innovation. The noble Lord, Lord Norton, argued against compartmentalisation. I think he is right. But the noble Lord, Lord Broers, will be pleased to know that someone was listening and the knowledge transfer networks relating to metals, plastics, textiles and composites have all come together to form a matrix of the businesses and universities working in those areas.
	So where do universities go from here? The clue lies in the idea of the noble Lord, Lord Broers, of a matrix of innovation. Collaboration between different disciplines creates the innovation we need to maintain our competitiveness in the face of the emerging economies, as the noble Lord, Lord Patten, said. Universities are the ideal institutions to draw on the several disciplines needed to create this matrix of innovation. The noble Lord, Lord Rees, spoke of the multifaceted aspect of universities, a point also made by my noble friend Lord Parekh. Innovation will come from a combination of skills. Indeed, it is the idea of co-operation between universities, industries, research centres and public authorities that is central to the European Union 7th Framework Programme, with two-thirds of the budget going towards this kind of research and development, a budget which has been increased from €5 billion to €7 billion a year.
	Where else can universities direct their research and development? What about the services sector? As my noble friend Lord Giddens told us, it represents 80 per cent of our economy. We have learnt that blending products and services gives us the competitive edge in manufacturing. How do we gain the same competitive edge in the services sector? We do not really have a name for it over here, but in the United States it is called services science. A couple of dozen universities are experimenting with courses and research programmes in this field—perhaps one of the universities visited by the noble Lord, Lord Patten, was working in the area. He spoke of the lack of research by Wal-Mart and Tesco. This is an understudied area because innovation in the service sector is different. The language and metrics are different, and their relationship with universities is tentative and underdeveloped, but the potential is there. I know that the Council of Science and Technology is working hard because it feels that this could be of particular value to universities in the UK and to our economy.
	We can go further. We now understand the value of a strong science base. We understand the value of the partnership between business and universities in research and development. But what is less well understood, although of growing importance, is the trade in related services. With our open approach to trade and collaboration, and to science, we can become a global hub for collaborative innovation in both manufacturing and services in the same way as the City of London has become a global hub for financial innovation. This is the direction for research and development at our universities, and I am grateful to the noble Lord, Lord Patten, for initiating this debate so that I can ask the Minister if the Government agree.
	I have a minute left, so perhaps I may ask the Minister about the research assessment exercise. Many feel that the system is falling into disrepute because of game playing and grade inflation by universities, almost devaluing the assessments. Something has to be done, and reference was made to this in the Budget last month. There seems to be a suggestion of a move towards replacing the present system with assessment by citation. Could the Minister please clarify this? Will only UK citations count, or are international citations included? I look forward to the Minister's explanation.

Baroness Carnegy of Lour: My Lords, we are indeed fortunate nowadays to have in our midst someone with the combination of experience of international and practical politics and current university involvement possessed by my noble friend Lord Patten. Personally, I found his speech absolutely fascinating and, to a degree, inspiring. I hope that we shall hear a lot more from him in these debates. From the fairly humble position of someone in close contact with two or three universities, I want to touch on two points.
	My first point is that the other day we discussed at great length in this House the research assessment exercise. One important point was not properly made. We need a simpler system for assessing research for funding. The problem is that it must not be so simple that it does not allow for the very wide variation in the circumstances of different universities. For example, some small universities enjoy a big national and international reputation in research. Any new system must deal fairly with them. The University of St Andrews is an outstanding example. A comparatively small university with only 5,500 students in a small town, its teaching and research, of necessity, cover a limited portfolio of academic areas. Yet its research is world class and, in UK terms, at the top. In such a case, it is clear that any quality assessment cannot be based simply on the amount of research done and the raw statistics of output. Assessments must also reflect the standing of the institution in the world's wider academic community.
	Another example referred to by the noble Lord, Lord Patel, was the University of Dundee. It is a large institution whose research is strongly skewed towards biomedicine. As a result, some 45 per cent of its work is charity funded. That will present problems for assessment because charity funding is treated differently in the assessment system. It is another example of an "unusual" university that has to be taken into account.
	My second point relates to how the Government view the contribution that universities make to the economy, a matter discussed very skilfully by the noble Lord, Lord Parekh, and my noble friend Lord Norton. The Government rightly understand and support the direct commercialisation of research, but I am not at all sure that they appreciate as clearly the wider part of the picture that the noble Lords have been discussing. That wider part is less tangible and less measurable—and the Government prefer that which they can measure.
	When visiting Dundee earlier in the year, Mr Gordon Brown opened the university's new drug discovery unit. It is a big, £13 million project, which has been funded to the tune of £8 million by the Wellcome Trust. It is the only one of its kind in Europe and is designed to tackle some of the world's most neglected, devastating diseases in places such as sub-Saharan Africa and India. Mr Brown was enthusiastic and said:
	"Remarkably, 16 per cent of the local economy is based on the life sciences and biotechnology; and we have an incredibly important life-sciences cluster here [in Dundee] matched only by Cambridge and London . . . the future of the Dundee economy is inextricably linked to what is going on in the university".
	The Chancellor doubtless had in mind the 16 spin-off companies created in the last decade by Dundee—nine of them in life sciences and medical devices—and the many other potentially profitable activities in Dundee.
	I wonder whether he also included in his calculation what a university can contribute to the economy by producing well educated, capable and imaginative people, full of enthusiasm to be entrepreneurs in the variety of areas of business life. Dundee, with a far too small private sector, desperately needs such people, as does all of Scotland and, indeed, the United Kingdom.
	My noble friend Lord Patten reminded us that the Chancellor admires the United States university system. St Andrews University tells me that technological institutions such as the Massachusetts Institute of Technology generate only 1.2 per cent of their income from direct commercialisation of research. The huge wealth created in Boston comes not from projects but from people moving out from MIT and the other local universities into a private sector driven by an unrestricted entrepreneurial spirit.
	As the noble Lord, Lord Parekh, and my noble friend Lord Norton have emphasised, the key is surely attracting top scholars and researchers—in the arts and sciences—to universities that are not compartmentalised and where the creative process can flourish for everyone. To be such places, with such ambitions, is surely the most important economic contribution that universities can make. That, above all, must be the aim of our universities, in this country and in Europe. It must also be the Government's aim for our universities.

Baroness O'Neill of Bengarve: My Lords, we are all indebted to the noble Lord, Lord Patten of Barnes, for instituting the debate. I think we all agree with him that without investment we do not get research, and that that investment is, in this context, to a very considerable part public investment. Taking that as read, it is very important for us to think about how public investment is funnelled towards research and development in the universities in this country, and whether we are doing it in the best way, because we are on the edge of a period of likely change.
	Looking at the Science and Innovation Investment Framework report—and, in particular, the Next Steps document, which we had an opportunity to discuss rather briefly the other day—there is one extraordinarily welcome element in the current proposals: that is, that the Government intend to retain the current dual-support system for funding university research, which has served us well. The dual support system separates funding for specific research projects, which is awarded on a competitive basis by the research councils, from QR research funding, which is paid directly to the universities through the higher education funding councils and then distributed by them in accordance with their research strategies. That second element of dual support is crucial for research in the humanities and social sciences.
	In this regard, I disagree with the noble Lord, Lord Parekh, because the only reason I have had time, over many decades in this university system, to be, as the phrase is, "research active" is that a proportion of my pay has been based on that funding stream. I declare an interest on that account and as president of the British Academy, the national academy for the humanities and social sciences, where we have, of course, an exceptionally wide range of diverse disciplines to think about.
	At present, the QR funding that each university receives is determined by the quality of its research in each subject area, as judged by the research assessment exercise—the next exercise will take place in 2008—which uses peer review to judge research, subject by subject, university by university, across the UK. As is widely agreed, the research assessment exercise has brought great benefit to the quality and productivity of UK university research.
	But it has at least three linked defects. I say "at least" because the obvious one is that a great many academics do not love it. We shall put that aside. The RAE is laborious and expensive and, in some cases, university departments and universities have gamed the system. There is no doubt about that. The Government propose that after the RAE of 2008, a metrics-based system will be introduced, which will undoubtedly be simpler and cheaper to operate. At present there is a committee, jointly chaired by Professor David Eastwood, the incoming chief executive of the Higher Education Funding Council for England, and Sir Alan Wilson of the Department for Education and Skills. They are working towards a shadow metrics system to be used in parallel with the 2008 research assessment exercise, after which the intention is to drop the research assessment exercise and rely solely on metrics. The universities welcome the intention to test the proposed metrics before they are introduced. I think they would also welcome simpler and cheaper systems.
	But there is widespread, and not entirely ill founded, scepticism whether such systems can be found. It is well known that many metrics are problematic, especially in the humanities and social sciences. Citation indices are unreliable in these subjects because of the variety of practices in publishing and citation. Attempts to rank journals may alter the number of submissions they acquire and their reputation—and hence their quality—and so compromise the purported measurements. Monographs are of varied quality and importance. They are the easiest and the hardest art form. What matters for research assessment is not quantity but quality of research, and no set of metrics will be adequate unless it can measure quality as reliably as peer review does.
	This is not a marginal matter—not even an economically marginal matter. The economic value of research in humanities and social sciences may seem harder to quantify than that of some research in the natural sciences and engineering but its economic contribution is enormous, and it is not just a contribution to the heritage industry. Just as it would be absurd to value science and engineering only for their economic contribution and to neglect their huge contribution to culture, design and public life, so it would be absurd to value the humanities and the social sciences only for their contribution to culture, design and public life and ignore their economic contribution. The British Academy recently published a report under the title of Adam Smith's famous phrase,
	"that full complement of riches",
	which amply demonstrates the breadth, size and diversity of the contributions of the humanities and social sciences to economic, cultural and public life in this nation.
	The Next Steps report that the Government published at the time of the Budget points to the possibility of relying on metrics, but also to the even simpler method of relying on the very high correlation between the present two streams of research funding. It suggests that research grant income, allocated on a competitive basis using peer review, could provide a metric for distributing QR funding. That is pretty appealing at first glance. Peer review is laborious. We are doing it twice, making prospective judgments in allocating research grants, and then retrospective judgments under the RAE. As my noble friend Lord May of Oxford said in an address to the Royal Society when he was president,
	"it is time to stop arranging the deckchairs, no matter how thoughtfully and carefully, on two entirely different ships which ultimately have the same destination".
	This thought convinces only if moving to metrics can be done with limited adverse consequences, yet we have every reason to expect that reliance on research grant income as a metric for allocating the QR stream of funding would fall foul of Goodhart's law, which states that,
	"any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes".
	That was pithily rephrased by Professor Marilyn Strathearn as:
	"When a measure becomes a target, it ceases to be a good measure".
	There are many reasons for expecting adverse effects if both funding streams are based on a single judgment of quality. The most obvious one is that universities would then have very strong incentives to use their QR funding mainly to support subjects that reliably bring in grant money. The correlation between the two streams would, of course, be perfect.
	If the dual-support system is to continue to support quality and diversity of research, as it has done, we must keep adequate separation between the streams. Perhaps we can move to some metrics. Perhaps we can find a less disruptive, expensive and distorting approach than the present RAE. But the point is to support and nourish good research and I would like to finish by asking the Minister how the Government propose to test new proposals for metrics against the likelihood that they will create perverse incentives and damage research.

Lord Hannay of Chiswick: My Lords, the two themes touched on in today's debate—the future development of British and other European universities and their role in research—are of the greatest importance to all Europeans. The links between these two themes are not in doubt. Great modern universities cannot flourish without being heavily involved in, and successful practitioners of, research. They cannot just be turned into teaching factories—a kind of superior form of school—without damage to them right across the board. European research efforts will not achieve their full potential if they do not take advantage of the capacity of their universities to conduct research. Since it seems widely accepted that Europe's economic future and its ability to assure its citizens a genuinely improving quality of life depend on its developing a competitive knowledge-based economy, these two interlocking themes evidently need to be at the heart of any discussion of the future of Europe. Hence my warm thanks to the noble Lord, Lord Patten, for having made this debate possible and for having introduced it with such an eloquent and perceptive contribution.
	It is clear from the outset that the present situation should give us no grounds for complacency. Indeed, quite the opposite; it should give us grounds for alarm. Europe certainly does not lack universities. The quantum is large, but the quality is not high, to put it politely. I am no great fan of university league tables, but one has to pay some attention to them, as to statistics. Those produced by organisations outside Europe which have no particular interest in distortion—for instance, in China—are damning. Very few European universities make it into the world's top 50, and things could get worse if we do not do something about it. As our competitors, including those big developing countries that are now on a fast growth track, pour resources into their own higher education systems, our universities are poorly resourced, our academics are poorly paid and our research students are only too willing to look elsewhere, outside Europe, for the best setting in which to continue their research.
	As for Europe's research efforts in general, these are clearly lagging behind those of many of our main competitors. Once again, we can expect the newly industrialised countries such as China and India to put increasing effort into research and research-based industry. So doing nothing is a recipe for not very genteel decline and for having to make an even greater effort if and when we finally realise that we are no longer going to be able to support our citizens' quality of life without closing or at least narrowing the gap between us and our main competitors.
	So what is to be done? I would not favour some highly centralised public-policy-directed and largely public-financed effort at the European level—hence my doubts, which many others seem to share, about the proposed European institute of technology. This project seems, in any case, to be based on a misconception that it is somehow Europe's answer to the Massachusetts Institute of Technology. But the MIT is a great, largely privately financed university and research institution, competing on a level playing field with other great American universities and research institutions. That is hardly what seems to be envisaged for the EIT. In addition, Europe's past record in setting up higher education or research institutions—the European University Institute in Florence and the joint research centres—is hardly such as to encourage going further down that road. If the EIT is to be largely "virtual", what will it add to the effective co-ordinating function that is just beginning to be carried out by the European research council, in whose establishment the noble Lord, Lord Patten, has played such an important role? So before setting out on the EIT track, I hope that governments will give some more thought to the main objectives that they are pursuing.
	At the outset, might it not be worth challenging, or at least submitting to critical scrutiny, what has been seen to be the conventional wisdom for as long as I can remember and which appears still to be driving the EIT approach—namely, that we should be focusing on applied research and not pure research? Does that still make sense now that our economies are moving rapidly away from a heavy dependence on manufacturing towards service industries? Should we still be trying to make this not very meaningful distinction?
	We surely need to ensure that whatever approach we in Europe pursue is project-based and designed to achieve some clearly defined scientific or technical goal. Where Europe has taken that approach in the past—as with CERN, for example—it has worked quite well. Should there not be some very clear criteria from the outset that funding will be limited to specific projects, that these should be chosen to be competitive and timely at the international level, that independent peer review should be the basis of project choice, that delivery of projects within budget and schedule will be mandatory for further projects to be awarded and that specific project goals should be set to enable success to be identified?
	I hesitate, as an ignorant non-scientist, to stray into specifics, but it has been suggested to me that the following sorts of project could be worth pursuing at a European level: a facility to study the direct photosynthetic production of electricity; a facility to study quantum computing as a means of radically increasing the speed and scale of computational approaches to chemistry and biology; a study to facilitate the large-scale generation of hydrogen from waste materials as an energy source; a European gravitational wave observatory to study the universe through a new observational window; and a facility for nuclear magnetic resonance machines designed to carry out the proteomics of cancer and the discovery of new drugs. Those are just some very random examples. In each case, a grouping of world-class European scientists, drawn from more than one nation, should be involved, but peer review techniques should be applied to ensure that there is no need to swell the teams, and thereby the budget, to include members from nations which are weak in that discipline. There should thus be no cultural or political agenda, but simply the setting of a challenging and important goal and the capacity to succeed at it.
	What role should Britain and the British Government play in moving ahead this whole European agenda? A leading one, I would hope. We have, broadly speaking, a number of the strongest and most research-based universities in Europe. We have a wealth of human talent and, thanks to the policies pursued by this Government in the past few years, we have some prospect of continuing to be well placed in the European higher education sector. Our research effort overall, despite the laudable contribution of the noble Lord, Lord Sainsbury, as Minister for Science, remains less than impressive compared with some other European countries of similar size, but it is not so inadequate as to deprive us of any credibility if we seek to give a lead.
	Europe suffers not so much from a democratic deficit, over which so much ink has been spilled, as from a leadership deficit. Can and should we not be helping to fill it? The Commission will need to be part of any leadership approach, but, if left to itself, it will always tend to come up with over-institutionalised, over-bureaucratic solutions. Will the Minister indicate in his reply how the Government intend to proceed in the period ahead? If, as I suspect, we are not particularly enthusiastic about the project for an EIT, it is not enough to sit on the sidelines making carping comments. That has been Britain's role too often in the past. We need to come forward with alternative ideas which might appeal to a wide number of member states and help to rescue the Lisbon agenda from the disrepute into which it has fallen.
	There is a real opportunity here to move the European Union on to ground which will enjoy the support of its citizens and which will help to secure its future. It is surely only in that way that we will put behind us the setbacks over the constitutional treaty and the over-concentration on past methods and achievements, and thus build a solid foundation for our future prosperity.

Lord Howarth of Newport: My Lords, the noble Lord, Lord Patten, has preached us a sermon—and a splendid sermon it was—but the Government have also provided a useful text for our meditations in the document Next Steps, which advises us that the United Kingdom must move up the value chain to sustain world-class universities and the highest quality of research and get better at translating all this into innovative products and services. The Government should be praised for this analysis and, as a more acid test, they should be praised for the large increases that they have provided for research. The science budget is planned to reach levels that are beyond any dreams of avarice that I would have dared to entertain as science Minister 15 years ago. The Government should be praised also for their energy in bringing together academia and business.
	I praise the Government also for their recognition of the value of academic freedom and of blue-skies research. That proposition is not one that you would axiomatically expect to emanate from the Treasury and the DTI. The DTI has naturally and appropriately been exercised by how we can move the fruits of the laboratory into the showroom. However, if we are ultimately to be fully competitive, we must invest in originality. Too much concentration on applied and contract research on yesterday's knowledge jeopardises inquiry and academic originality. It is an irony that an excessively instrumental view of research may cause us to miss the best opportunities that universities have to contribute to economic development. The Government appear to understand this, although there is a worrying note in the Next Steps document at paragraph 1.10, in which the Government state that they believe that it is necessary to ensure that the UK's science and innovation system is more responsive to economic and public policy priorities.
	I would like to ask the Minister a question about the Government's decision to extend the research and development tax credits to businesses employing 250 to 500 employees. A lot of money is now tied up in the R&D tax credits. Since 2000, £1.5 billion has gone to 20,000 firms by this route. What evaluation have the Government made that has caused them to feel justified in extending this arrangement? Fifteen years ago, I looked with my officials at the case for additional tax relief on R&D. We concluded then that well targeted grants would provide better value. I wonder why we were wrong.
	Like the noble Baroness, Lady O'Neill, I praise the Government for their commitment to the dual-support system. I do so with a slight feeling of relief, as it was not certain that they would make that commitment. However, it means that research universities will be able to develop their own strategies and to manage their research and teaching together to fund the individual academic who may not benefit from research council funding, and to sustain the old-fashioned and essential concept of the university as a place where students are taught by people who are in the lead in their academic discipline and where teaching means personal, close and continuing engagement.
	The radical proposal in the document is the discontinuation of the RAE. I want to put in a good word for the RAE. It has been a great force for good. Academic friends confide to me now that Mrs Thatcher and Sir Keith Joseph were probably right to go on the warpath in the early 1980s and that probably too much research that was publicly funded with no questions asked was, shall we say, a little laid back. Sir Peter Swinnerton-Dyer saw the writing on the wall and separated teaching from research. He said that research funding—the QR funding—could in future be distributed on merit. By 1989, considerable sums of money were being shifted around the system. Of course, people complained and Sir Peter Swinnerton-Dyer was seen as the Torquemada of the academic system, although academics are often their own worst tormentors through the complexity of the systems that they design.
	The five RAEs have improved vastly the professionalism of research management. The writers of the document are pleased to state—and we ought to be pleased to read—that the United Kingdom leads the G7 in the productivity of its research base. If the upshot of the five successive RAEs is that we now have five or six universities in this country which are as distinguished as any in the world, closely followed by another 15 or so that are clearly world class, that is grounds for some satisfaction. We certainly cannot say that the system has been a failure. Of course, there is the difficulty that those elite universities scoop the QR pool, resulting in the phenomenon of the squeezed middle. Universities that are household names and have a history as research universities find it increasingly difficult to sustain their life as research universities. However, there is no realistic prospect that research funding by the Government will grow at a rate that gives much help to them. Perhaps there is a case for saying that the RAE has done its job and run its course, and that it is reasonable therefore to look for a simpler system that does not involve some of the distortions that the RAE probably creates.
	I shall not say anything about the system of metrics that the Government propose, because the noble Lord, Lord Norton, the noble Baroness, Lady O'Neill, and others have already spoken very well about it, but I add my commendation to the Government to take seriously the HEPI study, Using metrics to allocate research funds, which articulates some serious difficulties about the move to a system of metrics. I note that UUK states that, if there must be a system of metrics, there must be a sophisticated enough range of metrics. I see the dream of a simpler, less burdensome administrative system fading away. It is certainly sensible of the Government to propose running a shadow system of metrics in parallel with the 2008 RAE; there is plenty of time to think about it and get it right in the wake of 2008.
	The ghost at the feast is, as the noble Lord, Lord Patten, clearly suggested to us, the insufficiency of funding overall for higher education in Britain. The Government's vision is for sustainable and financially robust universities throughout the United Kingdom, but we cannot say that that is where we are. The costs of expansion have been huge and the jam has been spread thinly in many areas. There are many other compelling claims on the education budget, such as early years education and schools education, which is ultimately beneficial to the universities; but in the mean time, of course, the universities are competing with those other claims for the money.
	The Government have been right to increase rapidly their spending on further education, but it does mean that there is not enough for higher education. There is a worry about a loss of regional spread of really excellent universities. Everywhere, except among vice-chancellors, pay is inadequate, as the noble Lord, Lord Rees of Ludlow, explained. Junior lecturers are in some cases paid less than primary school teachers, whom I do not belittle, but junior lecturers as new academics start to earn late and little. They are clever people and they increasingly say that this opportunity cost of going into academia for a career is a price that they are not willing to pay. If we are to replenish our enlarged academic system with people of the quality that we need, the Government must address this problem, because it is fundamental to the future of our universities.

Lord Judd: My Lords, I join those who warmly thank the noble Lord, Lord Patten of Barnes, for having introduced this debate. I declare an interest in having the good fortune to serve on the court of Newcastle University, which the noble Lord chairs as chancellor. It is invariably a positive experience. I am also glad to be a member of the courts of Lancaster University and the London School of Economics—and I do some professional advisory work with De Montfort University.
	The renewed commitment of the Government, as underlined by the Chancellor of the Exchequer, to funding research and development in our universities is altogether welcome. Obviously far more funds are still needed, but it will be by the demonstrable effectiveness with which the available money is used that the case for that additional funding will best be strengthened. Intellectual, academic, scientific, technological, cultural and professional excellence is vital to the future well-being of the British people in our highly interdependent world community with its globalised economy. We can settle for nothing less than the maximum mobilisation of potential. Indeed, this potential represents our strongest national asset.
	Scholarship and learning are vital to the qualitative strength and durability of a well founded civilisation. But the application of learning is self-evidently of equal importance. Without it, we shall simply not survive. There is, therefore, no place for an argument that either original or applied research is the more important; both are vital. Indeed, there is no absolute dividing line. It is in the realm of original research that the imagination and vision to carry us forward will often be generated.
	I have just mentioned qualitative strength. History will assess us not by our quantitative success alone; it will, I suggest, look closely at how quantitative success is turned into quality of life for all our citizens—not just how their material aspirations are met but how their creative and cultural lives can be enhanced and fulfilled. Value systems matter desperately as, therefore, do the arts, the humanities and the life and social sciences. Research and development in these spheres must never be allowed to become an also-ran. It would be sad if posterity were to see us as a generation preoccupied, if I may use the old phrase, with the price of everything and the value of nothing. Indeed, as it has been asked, whoever increased their height by constantly measuring it?
	These concerns give grounds for considerable unease about any drift to a concept of teaching universities on the one hand and research universities on the other. Of course, there will be different mixes of research and teaching, but the two disciplines are essentially linked. If we retain any concept of a university as a community of scholars, teachers and researchers must be cross-fertilising all the time. Each discipline enriches the other.
	If we are agreed that research is vital to our future, we must ensure the maximum possible reservoir of potential. Inbred research communities will not ensure this. Some of the brightest and most talented potential may well be in our newest universities. It is, after all, these universities that are in the front line of the battle for access to higher education and the release of latent promise trapped in relative disadvantage and deprivation. It would be foolish to marginalise the contribution to research which these often exciting and stimulating centres of higher education can make.
	Meanwhile, the messages from industry are clear: research and development is central to its competitiveness. Universities can drive that process. Faced with the urgency and immediacy of environmental challenges and global warming, this becomes all the more imperative. Science parks and cities with physical proximity between universities and industry, co-operation with RDAs, sub-regional partnerships, knowledge transfer partnerships with small and medium-sized industry, hosting centres of excellence, open days to demonstrate likely benefits of collaboration are all already amply proving their worth, and such activity should be steadily expanded. Applied science can have a rapid impact on economic performance. We fail to recognise that at our peril.
	Different regions have different characteristics, which means that in the Government's approach there should be a carefully tailored regional policy. Interdepartmental and inter-university co-operation should be a part of this. At Newcastle, interesting work is being pioneered by the university on the part that development of geothermal energy could play in the regeneration of former mining communities in the north-east.
	Rightly, there is concern about the place of RAE in all this. RAE is expensive, not least in time and resources. Some sceptics question whether any changes that may result from it warrant the scale of what is put into it, a good deal of which is arguably distracting from concentration on the ongoing work. What seems to be clear is that any helpful system of evaluation has to be transparent, objective and fair: it has to recognise potential as well as proven institutional performance; it has to be open to different styles; and it must be about encouraging self-motivation and completely new types of initiative. Its overall credibility and acceptability are essential so that all involved see it as helpful and constructive. There must be no room for perceived protectionism.
	At the moment there are misgivings, and we must be honest about them—for example, that it is still weighted towards the more established universities and that it is not developing potential as it could, when this is vital to future reserves of research capacity and when some of the universities which appear to be best at relating to industry are the most squeezed for research funds. A metric rather than a peer review system may well have its merits, although I am not convinced that it is a matter of either/or and would argue that a combination may well prove the right solution. Wisdom, insight, judgment and imaginative but responsible risk-taking are surely important elements in a valid system.
	We are well down the road to 2008. Any abrupt change of direction could be damaging; its cost may be too high. If change is appropriate, perhaps we should favour an evolutionary approach, monitoring and using the 2008 exercise in a way that enables us to move forward constructively from 2008 onwards. As we are seeing in other sectors of education and in other significant parts of our social infrastructure, sudden changes of direction can have immensely adverse effects on motivation and confidence. A real sense of widespread stakeholding in the development of a new approach is essential.
	In our age of advanced technology, we have limitless and increasing amounts of information at our disposal. It is not altogether mad to detect a danger of humanity foundering in an ocean of technological capability and information. The future of the species will depend, I am convinced, as it always has, on wisdom and judgment. Cleverness without them spells disaster. Context and perspective are imperatives. History, classics, ethics, philosophy and law, as well as the social sciences, must be priorities. The real quality of a university worth the title should be measured at least as much by the status and merit of faculties such as ethics and philosophy as by anything else. We must not forget this as we grapple with the future of research and development.

Lord Broers: My Lords, I, too, congratulate the noble Lord, Lord Patten, on introducing this important debate, and on his excellent and forthright speech. I recognise at this stage of the debate that much of what I have to say has already been said.
	I declare my interests. I served as a vice-chancellor for seven years, and was an academic for 20 years. But I spent the first 20 years of my working life in the USA in industry, as a researcher. Today I want to talk about the creation of technology, and in that connection I declare my interest as president of the Royal Academy of Engineering.
	The development of modern technology is a long and complex process, starting sometimes with new ideas that emerge from science, but far more frequently from novel and creative combinations of existing capabilities. Universities play a vital role in all cases, and we starve them of resources at our peril. In recent times, as the output of basic research from industrial research laboratories has declined, universities have emerged as the major contributors to the science base from which new ideas emerge, and their research output is vital to a nation's industrial competitiveness.
	The second role of universities is, of course, to educate those who will be the innovators in industry, a topic I will return to in a minute. To sustain their research output, universities need a core of support from government, but much of their funding can be derived from partnerships with industry, and it is essential that they maintain extensive collaboration with industry and academic partners worldwide. In providing the core of support, government must ensure that the research is internationally competitive in quality and that the resources provided by government are used efficiently.
	Measuring the quality of such research is a difficult and varied task, and simple measures centring on publications, such as the quality of journals in which publications appear and the number of citations, are far from adequate. The difficulties are particularly serious when it comes to research that leads to advances in technology. In those cases the timescales may be long—even several years. There may be a need for confidentiality. Publication may be out of the question if one wants to establish international competitiveness. Patents provide a useful measure, but it may be better to seek metrics that assess the investigators' ability to gain support, either from industry or research councils, than it is to assess published output.
	The research assessment exercise, as it has been practised to date, with a heavy emphasis on publications, has done a poor job of assessing technological research, and may well have had a detrimental effect on output by driving investigators inappropriately to use the methods used in pure science to disseminate their result. Certainly, we are less competitive in our university research—in applied research and technology—than we are in pure science. To my mind it is essential that we explore a diversity of assessment methods—not only different methods for different subjects but methods that recognise the nature of the work: is it fundamental or applied, or is it scholarship? Again, we forget at our peril that our major competitor has no such exercise.
	As I said, the second vital function of universities is to educate and train the creative engineers and technologists who will work in industry to create the new technologies. Typically, they will outnumber the researchers by an order of magnitude, and are of course vital to the innovation process. These investigators will have to have the same sophisticated knowledge of their subjects and intimate understanding of the science that underpin their technologies as the researchers, and it is essential that their education be appropriate and up to date. To accomplish that there needs to be a close interaction between the industrial innovators and those who train their successors in universities. But universities need more resources for teaching to allow them to equip teaching laboratories with up-to-date equipment and techniques. Such resources make courses more interesting to the students and encourage more students to follow these careers. We are not producing enough of that type of graduate in the UK, and part of the reason for that is the lack of up-to-date facilities that let the students experience the excitement of operating at the frontiers of cutting-edge technology.
	Let us not forget teaching in our drive to support research and build the science base. The value of a science base is much diminished if there are no technological innovators to take the science and do something with it.

Lord Grabiner: My Lords, I, too, congratulate the noble Lord, Lord Patten of Barnes, on having secured this fascinating debate. I also congratulate him on his speech, which gave us an excellent big-picture overview.
	I want to concentrate on the approach to research assessment in the social sciences. I confess this is not a big-picture issue, and a number of other noble Lords have dealt with this issue in their speeches, but in my view it is very important. I should declare an interest as chairman of the court of governors of the London School of Economics.
	On the whole the RAE has had the practical effect of imposing a valuable discipline. The quality of research has improved over the years since 1989, and, as the Government said in the framework document, the RAE has acted as a driver of competition. It has focused institutions on delivering high-quality outputs, and departments have been incentivised to deal with underperformers. As a result, institutions such as the London School of Economics have secured benefits in the international marketplace. We all have our own views about ranking arrangements but the fact is that overseas students pay attention to the rankings and we have, with some conviction, been able to say that the UK has in place a rigorous system of quality control. In reputation and in financial terms, it is also true that the RAE has rewarded academic excellence.
	The downside of the RAE is well known. It is expensive in absolute financial terms and it is hugely time consuming for people who could and should be more usefully engaged in teaching and research. In addition, it may cause academics to focus too much on peer-reviewed journals. As a result there is a risk that universities may become inward-looking, and that would be a dangerous development. So far as science and engineering are concerned, there appears to be an emerging consensus to the effect that a metrics-based assessment would provide an adequate replacement for the RAE.
	The problem, in my view, is that the pure application of metrics will not work; certainly not for mathematics, the arts or social sciences. In these areas, allocating the QR on the basis of total research income, which is far lower than it is for the hard sciences, will significantly reduce funding for the social sciences. I am sure this is not the intention of the Government, not least because social science is an increasingly important export. Students from developing countries see the need for a better understanding of how to run their economies and societies in the future. The situation at the LSE is interesting: we now have 550 mainland Chinese students. They want to study regulation, where the UK has a strong reputation and a significant competitive advantage, the media, human rights law, urban planning and so on. Our anticipation is that their numbers will grow.
	We need a methodology for distributing core research support for the social sciences. Quality assurance is essential. Universities cannot expect to be supported regardless of the quality of their output. To be fair to them, I do not think they would claim otherwise. The QA process should have a strong peer-review element, which has been a valuable feature of the RAE. It should have a less cumbersome methodology. There should be fewer panels and sub-panels and less frequent iterations. We need to recognise the strengths of the RAE as well as its weaknesses.
	The 2008 RAE will determine outcomes going forward with effect from 2009-10. I am in favour of retaining it. The universities are geared up for it and have proceeded for some time on the basis that it will happen. Also, there is absolutely no consensus to do otherwise, and the Government made it clear in paragraph 4.18 of the framework document that without such a consensus the 2008 RAE should proceed. For the longer term, the Government are right to be contemplating a more economical approach but devising a better, cheaper system that secures the confidence of our universities and, more importantly, of the students and academics who come from overseas, will take a little time. Simple systems are often harder to devise than complex ones.
	I want briefly to make a separate point about the amount of funding available for the social sciences. Between one third and one half of United Kingdom university staff are engaged in the social sciences and humanities. Currently, the total amount of the available pot distributed by the research councils is about £2.3 billion. Only 9 per cent of that figure goes to the social sciences and the humanities; that seems disproportionately low. No doubt it is the product of history, but I hope that it will be rigorously examined in the process that will—I am sure—lead to the new regime.

Baroness Warwick of Undercliffe: My Lords, I join other noble Lords in congratulating the noble Lord, Lord Patten, not only on calling for this debate today, but on his enormous contribution to the promotion of UK higher education in his roles as Chancellor of the University of Newcastle and the University of Oxford. While I very much identify with the points made by the noble Lord, Lord Parekh, and others about the primary goal of universities and the importance of teaching, I will focus my short contribution on the importance of funding for successful research.
	This debate is particularly timely because, as we know, the Government are currently engaged in a zero-based Comprehensive Spending Review. In the context of what we know will be a tight spending round, all publicly funded activities will come under scrutiny as the Government decide how best to use the scarce available resources. We in the university sector—here I declare an interest as chief executive of Universities UK—are acutely aware that we will be arguing not only for additional public funds but to maintain the current share of taxpayers' money allocated to higher education.
	If we look at the six strategic challenges that the Chancellor has already outlined as the context for this Comprehensive Spending Review, universities have some cause to be optimistic about the increasingly central role that they will play in delivering public policy objectives. I mention that in the context of this debate because the higher education sector's growing contribution to research and development, and particularly the interface between universities and business, is a key factor in increasing the UK's productivity, which is one of the Chancellor's key strategic objectives.
	Another of the Chancellor's challenges is international competition, and it is clear to me that universities will be at the forefront in generating the ideas and the skilled workforce that will maintain our competitiveness. A third strategic challenge identified by the Chancellor is the acceleration of the pace of innovation and technology diffusion. The Chancellor referred to the,
	"increasing knowledge intensity of goods and services".
	What I think he means by that is that, as a nation, we are no longer in the business of selling coal and the like. The products and services that we sell are increasingly high-tech, requiring high skills. In fact, the Prime Minister has memorably described our universities as,
	"the coal mines of the 21st century".
	Our universities will not only help to equip people with the high-level skills to stay abreast of fast-moving developments in the way we do business but, in collaboration with industry, they will help to turn the brightest ideas into cutting-edge technologies, products, processes and applications that will keep our business community ahead of the competition.
	The potential for universities to contribute to meeting the challenges identified by the Chancellor is enormous. In terms of teaching and research, we already have a world-class reputation on which to build. We are increasingly aware of the importance of what we in the trade call the "third leg". Universities now see knowledge transfer and business interaction as a key part of their mission. Some 89 per cent of higher education institutions have a single inquiry point for businesses, and there are more than 4,000 full-time equivalent staff whose main role is working with business and the wider community. Universities are spinning out companies, which generate about £360 million a year and employ about 13, 000 people.
	But it is true that nationally we invest only 1.9 per cent of GDP in research and development. That is too low. Worse, in the UK more than 75 per cent of R&D spend is in pharmaceuticals, biotechnology and aerospace, which involve only a few major companies. That clearly illustrates the weaknesses of the industrial R&D investment record. The Government have set an ambitious target of increasing that proportion to 2.5 per cent by 2014, of which they hope 1.7 per cent will come from private sources. Meanwhile, the European Union has set an even more ambitious target of achieving investment of 3 per cent of GDP on research and development as part of the Lisbon agenda to make the European Union,
	"the most dynamic and competitive knowledge-based economy in the world by 2010".
	I certainly could not accuse the Government of a failure of ambition here. Reaching the target of 2.5 per cent will require an average annual growth rate of 5.7 per cent from now over the coming decade. That will mean a big commitment in terms of public funds, but it will also require a lot of effort to increase private investment in R&D. While some sectors of the economy already invest, many other sectors of the business community are less engaged. It is clear that investment in R&D by businesses in this country has stalled.
	The Chancellor's decision in this year's Budget to extend R&D tax credits to companies with between 250 and 500 employees is very welcome. So, too, is the Government's commitment to providing a permanent funding stream to encourage knowledge transfer activities in universities. But the sums spent on supporting this type of activity are still small. My message to the Chancellor, as he does his Spending Review sums, is that a little strategic investment in encouraging university and business collaboration in research and development would be money well spent. Currently, only about 2 per cent of funding councils' budgets goes towards knowledge transfer activities. I would not want resources to be taken away from teaching and core research, but I would put in a fervent plea to the Government to increase their investment in the "third leg". In this case, I believe you have to spend a little to gain a lot.
	I conclude by reinforcing the concerns of the noble Lord, Lord Patten, about the proposal to create a European institute of technology. While I applaud the commission's desire to stimulate knowledge transfer and address key challenges in the exploitation of research, in common with many others in the university sector both in the UK and elsewhere in Europe I think that the plans as they currently stand are ill thought-out and are very unlikely to produce their aim, which is a European MIT. There is great concern that these proposals will be allowed to distract resources from the European Research Council, whose creation I fully support. Will the Minister reassure me that the UK Government will do all that they can to ensure that this is not allowed to happen?
	Universities can help to meet the strategic challenges faced by the UK, and they can do even more to drive productivity and enhance our competitiveness. Universities are taking an increasingly central role in regional development, attracting business to cluster around them, feeding on the energy that they create. If we want further to encourage that, the interventions need to be right, both here and in Europe. Those opportunities are enormous, and I know that the university sector looks forward to working with the Government to ensure that universities have the resources and support to enable them to deliver their potential to help to meet the Chancellor's challenges.

Baroness Rawlings: My Lords, I, too, thank my noble friend Lord Patten of Barnes for initiating this debate so clearly and eloquently. It is, indeed, timely, following the Chancellor of the Exchequer's announcement in March proposing "significant changes" in the way that research funding is allocated to our universities.
	I declare my interest as chairman of King's College, London, a fine institution that will no doubt be affected by the outcome of the review. King's currently has 24 subject areas awarded the highest rating of 5*, and 5 for research quality in the most recent research assessment exercise, demonstrating excellence at an international level. It is also one of the UK's top seven generators for research earnings, with income from grants and contracts of more than £99 million in 2003–04. Therefore, the wider public importance of university research is highly relevant to King's. It is a serious supplier of research to government departments, notably in defence, biomedicine and health policy. The college is particularly proud, too, to be home to four Medical Research Council centres—more than a quarter of the national total.
	However, it was a little disconcerting for King's, a member of the Russell group, to find that major changes to research funding and the research councils were announced alongside the Chancellor's Budget Statement. Those proposals throw into doubt even the long-scheduled research assessment exercise in 2008 and prescribe a new method of assessment thereafter. The Chancellor's proposals also envisage major changes to the research councils, which will be "radically simplified", particularly with a merger of the Medical Research Council and the research and development activities of the National Health Service.
	The Chancellor does not exactly have a track record of bringing simplicity to any process or structure that he has reviewed in the 10 years that he has been in office. Yet, prior to these announcements, there has been a minimum of consultation either with the universities or with their representative organisations. We have grown used to analysing the small print of Budget day publications for important, but unheralded, announcements. If the Government want higher education to continue to play an important part in the success of this country—and I am sure that they do—they need to consult more widely on issues such as these and to listen to what the universities themselves have to say.
	Their input is particularly relevant. During the past year, the universities have been systematically discussing the future of research assessment and, in collaboration with colleagues in the health service, the future of NHS research and development. Like any system, the current research assessment exercise—the RAE, which has been mentioned many times today—has its faults. In due course, it will need substantial reform. In designing any new system, the Government must ensure that they introduce not only a fair allocation of funding, but provide the right incentives to help universities adapt to the new international environment.
	As the noble Baroness, Lady Warwick, the chief executive of Universities UK said, we should have "an open mind" as to what should happen after the next RAE. I am sorry that she was unable to be in her place for some of this instructive, outstanding debate—the kind in which your Lordships always excel.
	We cannot forget that in 2006–07 the Higher Education Funding Council for England will distribute £6.7 billion of which £l.34 billion will be for research. Despite that sum, the United States is, as we heard from my noble friend Lord Patten, the most important source of top-quality research, with the UK coming second. Over the coming years, however, we must expect China and India to make themselves felt as major players in basic, as well as applied, research. This highly competitive situation will require imaginative responses from Britain's universities and from the Government.
	Any future system for allocating research support, as many noble Lords have stressed, should not only support basic research but recognise the importance of the successful application of research to the country's social and economic needs, encouraging, too, approaches that cut across established disciplines and develop commercial applications when relevant. We have done much of both at King's.
	Although our universities are already major global players, we need to recognise that they will need to become even more outward-looking, establishing ever-more successful partnerships with the best universities in the US, Europe and elsewhere, not least in China and India. Universities are ready and eager to play their part and what we require from the Government is partnership, consultation and support.
	The Chancellor says that he wishes to "simplify" the RAE, but at the same time he must simplify the system for business to help higher education, as the noble Lord, Lord Broers, said, and encourage more strategic partnerships in research between the public and the private sectors; most importantly he must provide better tax incentives for charitable giving for higher education institutions. I repeat that he must provide better tax incentives for charitable giving to higher education institutions, because that is so important. Only if those are encouraged will we retain our leading position as a provider of the finest research.
	There is an old country saying which is relevant to any search for wisdom on a difficult issue: "Ask the fellows who cut the hay". In the case of research policy, the hay cutters are the country's major research universities. In that context, can the Minister assure me and other noble Lords involved with research universities that the views of these institutions will weigh heavily in the forthcoming consultations relating to the research assessment exercise and the organisation of research grant funding bodies, notably in biomedicine?

Lord Dearing: My Lords, I join in congratulating the noble Lord, Lord Patten, on stimulating three and a half hours of world-class, free consultation for Her Majesty's Government. You are a lucky lot.
	I begin with a brief reference, which has already been made by the noble Lord, Lord Parekh, to the EU/Lisbon agenda—that Europe should aim to become the most competitive, dynamic, knowledge-based economy in the world. I know of no better hole to go down, especially after listening to the summary of what is happening in China, given by the noble Lord, Lord Giddens. The Government are aware that China doubled its expenditure on R&D from 0.7 per cent of its GDP in 1998 to 1.4 per cent in 2004. In fact, that was a tripling of the amount it committed to research because of the fast growth of its economy. Its target is to match the United States in 2020.
	I note that there has been a mass re-migration of academics from Europe and the West back to China to staff its vast fast-growing university sector. The other day I heard of a campus being established from scratch to accommodate 150,000 students in four years. I note that in the Chinese Academy of Sciences, 81 per cent of members are repatriated. In the Chinese Academy of Engineering more than 50 per cent are repatriates. That is the way it is going. China is heading to challenge us right across the field at the highest levels of research and its application to industry. Unless we respond, we shall be buried.
	Our own allocations to research are average by European standards. However, a particular problem, identified in the Lambert report, is the reluctance of many parts of our industry—there are outstanding exceptions—and commerce to take up what universities can offer. The whole of the Lambert report was aimed at what we could do to resolve that problem. Although the noble Lord, Lord Howarth, questioned whether the decision in the budget to extend the tax incentives to industry to engage in R&D in 250 to 500 firms was probably not the best way to do it, I am thankful for all mercies. We need everything we can get. Let that decision be executed.
	I was stimulated by the Government's paper issued in March, Science and Innovation Framework 2004-2014: Next Steps, to see the extent to which they are responding to Lambert. However, I noticed that Finland has created an ecosystem in which research translates into innovation, goods and services. That stimulated me to look at the figures to see what was happening elsewhere. I noticed that three other small countries, Sweden, Switzerland and Denmark, which all have a high commitment to R&D, and all of which, in relation to their population, are excellent regarding the number of citations, and, in relation to their size, are excellent regarding the number of patents. That caused me to ask myself the following question—on which the Government might reflect—what makes such things happen in those countries? I suspect that part of it is the way in which, in smaller communities, decision-takers rub shoulders with mutual confidence, respect and collaboration.
	That induces me to say that within our strategy we must continue to aim to retain the No. 2 slot in the rankings, which is being increasingly challenged by Germany and Japan. But we must also recognise that, in terms of innovation at local level, which is where it takes place, we need devolution of funding from the centre to local level among the people who rub shoulders. Newcastle University has been referred to at least twice during the debate. The creation of the Government's Science City initiative, of which Newcastle is the best exponent that I know, is the right way to do it. The Government have funded knowledge transfer partnerships. The University of Hull has been referred to. It is enthusiastic and energetic about those partnerships. The devolution of funding to the RDAs is the way to go because they can make things happen between people. Life is very much about interaction between people. While we need to retain the great centres of research excellence, we need that capability of interaction at local level to be funded. I commend the Government to continue doing with increasing vigour what they have started so well.
	Reference has been made briefly to metrics. If I read the figures correctly, I welcome the fact that the European Union has committed itself to a budget of €70 billion between 2007 and 2014 for research and has created a research council. I shall be delighted if that happens. If the sums are distributed on merit, with Britain having at least half of the 10 best research institutions in Europe, we can benefit, so we should welcome that. The technology institute is an entirely different matter. I am talking about getting the research out to the people and the universities where the interaction takes place. I refer to the contribution by the Higher Education Policy Institute, which has been mentioned. As a former chairman I declare an interest. By going behind the Minister's back and talking to his officials, I was reassured to find that they have already read the document and understand it. I hope that, in looking at the alternatives, Wilson and Eastwood will be given time to do the job well and will not be rushed, and that it is within the rules of the game to respond to the comments that have been made, for example, that metrics may not work at all well for the humanities and mathematics or the social sciences. They must be able to say to the Government. "It is a good idea but".
	Finally, going back to the Lisbon declaration that Europe has to be the most dynamic competitor and so on, it strikes me—this is not often referred to—that in each of the past eight or nine years we have had a balance of payments deficiency, and it has grown every year. We must respond to the Lambert agenda to reverse that.

Lord Winston: My Lords, five years ago we set up at Hammersmith Hospital, as part of Imperial College, a state of the art, six storey building—the Institute of Reproductive and Developmental Biology, housing up to 130 scientists. One of the things that we did on the five laboratory floors was to ensure that there were curved walls going right across the laboratory so that we could hang up our posters so that the public could be engaged with the science that we were doing. Health and safety decided that the posters constituted a fire risk. Each week I put my posters up and each week they are taken down.
	I want to discuss the issue of regulation and how it affects research and focus on an area which has not been very much concentrated on but which is extremely important to research and development; that is, the medical schools in Britain and Europe. Your Lordships will be aware that one of the areas where we clearly lead, partly because of liberal legislation, is in stem cell biology. At least we should lead but, sadly, if you look at the publication record, you will see that over the past three or four years—I have done the index to look at this—Singapore and Israel together have published more than Britain. I believe that their combined population is that of London.
	I must declare an interest as an academic at Imperial College who has floated a university spin-off company which is involved with stem cell research. Three years ago, before the company was finally formed, I applied for a Home Office licence to inject six pigs with a gene construct which was completely non-toxic and which could cause no possible damage to the pigs. We simply wanted to see what happened to their sperm. It took 13 months for the approval of that application. In the mean time, while the company was being set up with an investment of £3 million—not a huge sum but enough to employ the eight people and the resources that I needed—we applied to the local ethics committee—the Government's own ethics committee—for ethical approval to compare stem cells in embryos with stem cells taken from the testis. There is reason to believe that the adult cells in the human testis might be a way of avoiding the complexities and the ethical difficulties of using embryos. In order to do that you need to culture the two types of stem cells in parallel and compare them and their gene expression.
	After four months, because of the queue, the application was looked at. The consent form that we had designed was a matter of dubiety, but not the research, which was returned. It took us a little while to decide how best to deal with the consent form. It was sent back. After nine months from the original application, consent was given for our research. We then, of course, had to apply to the Human Fertilisation and Embryology Authority—that paragon of virtue—for ethical approval. After three months it considered our application and returned it because in its view the consent form was not adequate. Actually, some of the things that it wanted in the consent form were things which our ethics committee had refused. So we went back, revised the consent form and I heard this week that it has now been approved by our ethics committee and it has now gone back to the Human Fertilisation and Embryology Authority.
	We now face the peer review of our research. This week, I wrote to the HFEA asking why an anonymous peer review of an ethical application was required. I understand that it would be required if we were in pursuit of public funds or, indeed, if we were trying to publish our results, but, not unreasonably, as researchers we did not particularly want to show all our cards to the reviewer. In the end, the review that we had was absolutely scathing: it was misleading, scientifically inaccurate, misspelt and grammatically incorrect. Frankly, it was a disgrace to the person who wrote it. I asked the HFEA this week whether, in the spirit of openness and transparency, the person responsible might be revealed to us so that we could at least discuss the application. That has been refused. Although I am here, I understand that today my laboratory is being inspected by the HFEA. I must tell your Lordships that it is a state-of-the-art laboratory. We are using cells that are being thrown away and are of no use to anyone, and we do not intend to treat any human being with them. They are effectively dead cells.
	The HFEA has inspected these laboratories on a previous occasion and has found them to be a paragon of virtue. But, for some reason, because this is a new application, we have to undergo another inspection. It is possible that, by the time our grant runs out at the end of this financial year, the £3 million will have been spent and we will finally have approval to do the work. This is an example of work that is investment, with venture capitalists who want to help us, but which has completely failed to produce its objective in the stem cell biology field.
	That may be an extreme example but it raises a very serious issue in regard to medical schools. At present, for all sorts of reasons, there is a huge disincentive to carry out research and development work. Undoubtedly, one issue is regulation. Dr Kate Hardy, a leading human embryologist, worked in my group for many years but eventually, two years ago, she gave up human embryology because of the attitude that the work that she was doing was in some way disreputable and required extra surveillance by the HFEA. She decided that that was just too much and she has now gone into a completely different field which does not involve human embryology. That is a loss to our subject. In addition to the other problems in universities, that is an area that we need to look into urgently.

Lord Soulsby of Swaffham Prior: My Lords, I am grateful to the House for allowing me to speak in the gap. I have three minutes, I am told. First, I apologise to my noble friend Lord Patten of Barnes for not having added my name to the main list of speakers. I shall not bore noble Lords with the reasons for that.
	I worked in the United States for 15 years in an Ivy League university and was always impressed by the amount of income to universities that derived from charitable and alumni giving. As some of your Lordships may know, the taxation system in the United States allows one to donate from the top of one's gross income, so reducing the amount of taxation dealt with by the tax inspector. Very frequently, the tax adviser will suggest that you give more to charity, the net result being that at the end of the day you have more left than if you had not given any additional taxation.
	Many universities in the United States are private and exist on no federal income whatever, other than in the field of research and overheads. Some very well known universities survive only on this federal funding via grants and overhead funding. Some are entirely dependent on that source of income, plus at times state funding as well. This source of funding via alumni giving is responsible for 30 to 40 per cent of university income and can often be spent on any area of discipline within the university. It always seemed to me that it was a very valuable source of funding, unlike that in this country, which is more complicated. Obviously one can give funding to universities under the taxation system here, but it is not as simple as it is in the US. Have the Government given any thought to having a taxation system identical or similar to that in the USA whereby charitable giving can be a substantial part of the income of a university and can also be used across the board in disciplines that would not normally attract federal funding?

Baroness Sharp of Guildford: My Lords, I join others in thanking the noble Lord, Lord Patten, for initiating this very timely and fascinating debate. I declare an interest as having been, for the past 20 years, an academic at the Science and Technology Policy Research Unit of the University of Sussex and remaining a visiting fellow of that unit.
	Pondering the title of this debate—the role of British and European universities in the promotion of R&D—took me back 10 years to a project in which I was engaged at the Science and Technology Policy Research Unit for a report for the Treasury. Effectively, the question that we asked was: what does Britain gain from basic research? The classical view—this was referred to by the noble Lord, Lord Giddens—is one that we have sometimes dubbed the "linear" view of R&D. It is the input/output model in which basic research leads to applied research, and applied research leads to new products and processes. It is a linear process.
	What came out of our research was that we rejected, to a degree, the concept of the linear process and pointed out that the great benefit deriving from research came through people and through the knowledge passed on by people. One of the major benefits of undertaking basic research is to provide us with an entry ticket into global research. As the noble Lord, Lord Rees, said, the UK publishes between 8 and 10 per cent of the world's publications in science and technology, and therefore rather more than 90 per cent is published elsewhere. If we are to access and understand what is being published elsewhere, we must have people who are trained in the leading edge of research so that they can understand and translate that research. That is the case whether they are working with their colleagues in an academic environment or whether they are working in a corporate environment so that the knowledge can be used within that environment.
	The purpose of R&D is therefore not only to generate new ideas and new knowledge but, crucially, to train people in leading-edge scientific and technological techniques and to provide an entry ticket into international networks. That, in turn, enables us to make use of the international science base.
	The noble Lord, Lord Patten, mentioned that the UK's aspiration is to increase the proportion of GDP going to R&D from the current 1.9 per cent to 2.5 per cent. The sad part about the current situation is that only 10 years ago the figure was 2.1 per cent rather than 1.9 per cent of GDP. In other words, R&D as a proportion of GDP has slipped over the past 10 years, and the main cause of that slippage has been not the public sector, which has increased its share, but the corporate sector.
	That poses a real problem for Britain if we are to gain access to important international networks. Eighty per cent of R&D spending is on people. The noble Baroness, Lady Warwick, mentioned that there are three areas of R&D in the corporate sector: biotechnology, pharmaceuticals and aerospace. Outside these, practically no companies in Britain are doing R&D. In this sense, universities play a part in basic research. They have an absolutely vital role in maintaining links with these international global networks.
	The noble Lord, Lord Patten, mentioned the degree to which the universities went through a funding famine, and how important funding is for R&D. The 1980s and 1990s were an era of famine for universities. This has changed, and I pay tribute to the Government, particularly the noble Lord, Lord Sainsbury of Turville, for having considerably reversed the squeezing of R&D budgets. Indeed, it is one of the few areas of public sector spending which has been increasing much faster than the rate of growth—a 4 to 5 per cent increase in the funding of university R&D. It may not be enough, and much of it has gone into new plant, buildings and equipment. As the noble Lord, Lord Rees, mentioned, much less has gone into salaries, which remain uncompetitive in this sector. If people are the key to this sector, that is a real problem. It is vital that we attract the bright young brains into it. Again, one of the important aspects is operating through collaborative programmes and getting these young people involved in them.
	However, as these funds were squeezed, so a mechanism for rationing was developed: the RAE, about which we have had quite a lot of discussion. It has both its upside and downside. All of us are well aware of the difficulties in humanities and the arts. The noble Baroness, Lady Rawlings, mentioned the suddenness of these decisions. On the one hand, there was the decision about the RAE in the Budget report; on the other, as mentioned by the noble Lord, Lord Patten, there was the merging of the NHS and the MRC. Nobody has asked what on earth the Treasury is doing announcing decisions overnight, without any consultation, about these important issues. Frankly, the area should be governed by an independent organisation, the Higher Education Funding Council for England, set apart from the Government because it is supposed to be independent and not influenced by political decisions.
	There has been quite a lot of discussion about European programmes. When I was at Sussex, I played a considerable part as a member of collaborations and in cataloguing the development of the European framework programmes. Both the exchange programmes—ERASMUS, Socrates and the Marie Curie scholarships—and the framework programme itself have established and catalysed an important pattern of collaboration which we are now extending, and not only with the advanced countries. One criticism at the end of the 1990s was over our collaboration with European rather than American universities. With such collaborations as the Cambridge-MIT Institute, this has begun to be answered. We are also now establishing new collaborations with India, China and Singapore, which are very important. The whole process of knowledge transfer comes as much through people and their moving about as it does through mechanisms for establishing it.
	We talked about the European Research Council, and the possibility of a European institute of technology. Although most people are supportive of some notion of establishing a European Research Council, considerable scepticism has been expressed over the proposals for EIT. I have a lot of sympathy with Andrew Duff, a Liberal Democrat MEP for the East Anglian region, who said that if there is going to be a European institute of technology it should be in Cambridge, not Strasbourg or anywhere else.
	Over the past few years, we have seen a sea change in the role played by universities in the knowledge transfer business. I began my career at SPRU by looking at biotechnology. There was an internecine battle between the MRC and the SERC over the development of the biotechnology directorate, because it was establishing a directed pattern of research. Directed research was, by definition for the MRC, unproductive. Nowadays, as the Lambert report identified, there is a totally different pattern.
	I conclude by bringing the attention of noble Lords, once again, to the developments at Newcastle, where one sees a university being the hub for regenerating a whole area.

Baroness Buscombe: My Lords, I also thank my noble friend Lord Patten for initiating this important, stimulating debate. I will focus on three areas: collaboration between universities, collaboration between universities and industry, and the research assessment exercise. Funding—indeed, the lack of funding—impacts on all the foregoing, and there are strong interdependent relationships at play.
	In the UK, virtually all our R&D is located in universities, not institutes or private companies. To release potential in the university sector, we need a new system to measure the value of research. The RAE system militates against collaborative efforts—a pity, given that big breakthroughs come from teams. When Dolly the sheep was cloned, it offered the chance to develop stem-cell research with inestimable long-term value for man and enormous economic potential. It was a large team effort, involving embryologists and cell-cycle control experts. The project was undertaken in an institute freed from the shackles of the RAE as they impact on universities. It came about as a result of decades of research and long-term, patient development of extraordinarily complex methods.
	If the participants in the Dolly programme had been trying to do that work in a UK university, the programme would probably have ceased before it really got started, for the simple reason that few people in the UK can work on big team projects in biology or medicine if it means sacrificing precious senior authorship of key scientific papers, which are the currency of the RAE. Dolly was also high-risk science, and our political culture in science militates against risk.
	However, with little coming from the RAE to encourage universities to collaborate, before a project has even started, rows commonly break out to determine who will be the top author on the paper, even when the results are not available. In the RAE for sciences, researchers are required to present their four best papers, and they had better be in top journals, with the researcher as the senior author. Each paper may represent the results of years of effort. There may be 10 other authors—that is a reasonable figure. The first author may have been the person who executed most of the work in the senior author's lab. He or she may have been a post-doctoral qualified scientist of some distinction, supported by scientists from other labs who contributed materially to the research. The first author may have left the lab after the paper was published and obtained a position in a UK university. He or she will then offer their major paper as one for the RAE. So, the message for UK scientists is: no collaboration and no multi-team, cross-disciplinary efforts, or at least not if you are going to put your heart and soul into it to the exclusion of other activities.
	American colleagues think we are barking mad. In their scientific culture, they are quite ruthless at putting together teams at incredible speed to crack a problem. Given that a scientific paper may take years to reach the point of publication, when it does, there must be an international team already in place to support and exploit the findings. The US understands that and responds.
	There are one or two notable exceptions where the RAE has not prevented progress. Take the Cambridge-MIT Institute (CMI), which was set up in 2000 to explore novel ways in which universities could work with each other and with industry and government to contribute to the economy through enhanced entrepreneurship, productivity and innovation. Over the past five years, CMI has developed core capabilities in convening diverse groups of people to work towards a key, common goal. For instance, the knowledge integration communities that CMI has set up bring universities and industry together in groups jointly to explore emerging technologies that will be vital to key areas of the British economy and the opportunities for commercialising products arising from this research.
	I have been lucky enough to be one of the first to see such partnerships in practice at Cambridge. The new Centre for Advanced Photonics and Electronics (CAPE) is bringing leading researchers together with global companies in a unique consortium that promotes the effective transfer of knowledge between academics and their partners in industry. CAPE benefits immediately from money for fundamental and applied research and has investments currently worth more than £7.5 million over the next five years. It is a shining example of the potential that exists.
	CMI has also developed new education programmes that blend the best of what Cambridge and MIT have to offer and make it available to others. The promotion of R&D must also, of course, be accompanied by some enlightened intellectual property protection that, while robust, allows collaboration between different institutions. We need to recognise the essential collaborative, international nature of research and development and its competitive implications. In addition, as my noble friend Lord Norton said, we need to be holistic in our approach to research.
	Research is, of course, not only about science, and I hope that the Minister is prepared for that. A further problem with the current way we think of R&D is that it attempts to quantify different activities on a common scale. Science and arts are just not the same. The timescales may be similar, but that is where the similarity ceases. In science, there is already an exhausting process for grant awards that audits in great detail the quality of the scientific proposal, the track record of the scientists, and the merit of the ideas among other things. The MRC, the Wellcome Trust, BBSRC, PPARC and other bodies are involved at every step. The process engages the time of multitudes of academics, as we have heard today. In the RAE, the Government have invented a parallel system in an attempt to get a single overall metric to judge worth in the academic sector. In the recent short debate in your Lordships' House exclusively on the REA, most contributors concluded that it would not be a panacea. I urge the Minister to share with his colleagues the eloquent speeches on that subject made by the noble Baroness, Lady O'Neill of Bengarve, my noble friend Lady Rawlings and the noble Lords, Lord Broers and Lord Grabiner. In truth, the RAE has been essentially damaging to the UK's research culture as a result of this Government's obsession with audit culture, league tables and, above all, central control. If you can quantify and rank, the argument goes, you can decide who gets the money, just by deciding how much each grade in each activity—science versus arts—is worth.
	Moreover, R&D used to bear some relation to teaching in universities. A common complaint is that the RAE has wrecked teaching. That is not strictly true, but the amount of time that staff spend with students is miniscule compared to 10 years ago. Students are economic units, not individuals any more, very often taught in large classes and machine marked by multiple choice scanned on a computer, untouched by an academic hand.
	The Government seem to be encouraging islands of research excellence in a sea of teaching sufficiency. There is one good point: the RAE has shaken up the system—it needed it. We are much better at supporting science and young people in the UK than in France, for instance. There is an inflow of good-quality western European scientists to the UK, so the system is performing better.
	In terms of promoting future R&D we must look at Asia. However, the real competition is, as other noble Lords have said, both the USA and Asia. As my noble friend Lady Rawlings said, we need to be more outward looking. Nowhere is this truer than in the sector with the greatest economic potential: biology and medicine. There is a real long-term UK plc issue here. As the noble Lord, Lord Dearing, said, unless we respond to this competition, we shall be buried.
	We should ask ourselves why Harvard University has full-time officers in China, interviews and recruits locally, and takes the brightest and best it can get; and then it pays them to train in the US. My noble friend Lord Patten has explained that Harvard benefits from huge endowments, together with taxpayers in the US spending more as a proportion of GDP on R&D than the UK, France and Germany.
	At Cambridge the Research Services Division, which has for four years been facilitating research partnerships with industry, is seeing more US and Asian companies prepared to work with it on speculative projects. It is all very well the Chancellor committing more funds for research. That is of course a welcome development. However, without a practicable apparatus in place to allocate research funding as efficiently as possible, this will just reward academics with further bureaucracy.
	I also share the concerns expressed by my noble friend Lord Patten and many others that a European institute of technology would not address these challenges. On the contrary, such an institute would, as other noble Lords have said, be expensive, distract resources from the European Research Council, prove inflexible and be competing with other already established institutes on a global basis.
	In conclusion, we should stop looking over the Channel to other failed European examples for a comparison and look to China, India and Korea. We could spend a lot of time analysing the past. What we must do now is design the future role of UK universities in the promotion of research and development, bearing in mind that science and scientists know no boundaries and seldom have political allegiances.

Lord McKenzie of Luton: My Lords, this is the third occasion on which your Lordships have debated research and development in the past few weeks. The debates prompted by the noble Lord, Lord Williams, and the noble Baroness, Lady Greenfield, concentrated on the important issue of the domestic research environment. Today's debate, however, has given us a welcome invitation to broaden our horizons and to consider UK research in its international context. I am grateful to the noble Lord, Lord Patten, for giving us this opportunity as well as to other noble Lords who have contributed this afternoon. It has indeed been a debate of the very highest quality.
	I know that my noble friend Lord Sainsbury, the science Minister, given his huge commitment to this area, regrets not being able to reply to the debate but he is, fittingly, on a government science mission to China. I am sure that he will read the record with interest. If time does not allow me to respond to all the salient points I will respond in writing to any outstanding questions.
	Research is by definition a fluid and dynamic phenomenon. If these successive debates have revealed one thing, it is that there is broad agreement on all sides of the House about how much research contributes to our national wealth, health, education, environment and culture. Perhaps I may first mention what the Government are doing to secure the future of our domestic science base. In July 2004, the Government published the first ever long-term vision for UK science in the 10-year science and innovation investment framework, a vision backed by hard cash and increased investment in university research.
	At the broadest level, we have substantially increased funding for both streams of the dual support system for university research. We have increased quality-related funding through the education funding councils, and in less than a decade we have more than doubled the science budget from £1.3 billion to £3.4 billion. Perhaps I may say to the noble Lord, Lord Patten—who I think questioned the Government's funding of HE generally—that, since 2000, the Government have maintained the unit of resource per student as against the sharp decline under the last government. We are committed to continue to do that as the new additional fees paid by students are introduced. This has been a significant boost to the university sector and is quite apart from the significant additional real resources for university research.
	Taking on board the recommendations of the report of the noble Lord, Lord Dearing, we have made major steps in addressing decades of previous underinvestment in our university research infrastructure. The Science Research Investment Fund is now a dedicated funding stream of £500 million a year. There has been a renaissance in new building and in the upgrading of our university science laboratories. One headline project with which the noble Lord, Lord Patten, will be particularly familiar is the contribution of more than £100 million made to Oxford for the information engineering building project, which brings a range of applications, from medical imaging to aerospace, to increase productive research collaboration and sharing of ideas.
	The Government have also put in place reforms to the dual support system to ensure the long-term sustainability of university research and are now investing £200 million per annum new money to enable research councils to pay 80 per cent of the full economic cost of the research that they commission.
	In recent years the Government have also done much to attract and retain the most talented researchers at our universities. Sir Gareth Roberts's review into the supply of people with science, technology, engineering and mathematics skills—STEM skills—identified a number of issues that were adversely affecting the appeal of those careers, including a lack of clear career structure, uncertain career prospects, unsatisfactory training and increasingly uncompetitive salaries.
	Through the research councils, we have introduced a series of measures to begin to help to tackle these issues. Some £185 million in new money has been used to provide a stipend of at least £12,000 tax-free to research council PhD students; transferable skills training for both PhD students and postdoctoral researchers; and increases in researchers' salaries in areas that experience recruitment and retention difficulties. The new academic fellowship scheme has created 1,000 new fellowships over five years and provides stable routes into academic careers. However, as the noble Lord, Lord Broers, reminded us, we need to ensure that world-class facilities are provided if we are to attract and inspire the best.
	Combined with other changes such as the fixed-term employee regulations, those measures have resulted in significant cultural changes in higher education institutions. The funding for skills training has enabled universities considerably to expand their training and support for researchers and PhD students. However, I am conscious of the comments of the noble Lord, Lord Rees, that we need to ensure that they are made more alluring. My noble friend Lord Howarth asked about the promotion of academic careers. There is no evidence of a university recruitment crisis. PhD numbers in this country are buoyant and an unprecedented amount of support and guidance is available to those who are contemplating a research career in this country.
	Looking ahead, we are mapping the principles of the European researchers' charter and the code of conduct for the recruitment of researchers. Today, technology and scientific understanding are changing our world faster than ever before and developments in information and communication technology, new materials, biotechnology, new fuels and nanotechnology are unleashing new waves of innovation and creating many opportunities for entrepreneurial businesses to gain competitive advantage. Competition grows ever stronger, not just from our traditional G8 rivals but from the rapidly growing China and India. As ever, my noble friend Lord Giddens spoke with authority about that, as did other noble Lords. We need to ensure that as much as possible of our world-class research leads to world-class products and companies. We were also reminded by my noble friend Lord Parekh that universities are not just about turning out units of production; they are about reflection enhancing civilisation and about ensuring that teaching, as well as R&D, is fully supported.
	During the past eight years we have provided our universities with incentives for knowledge-transfer through schemes such as University Challenge, Science Enterprise Centres and now the Higher Education Innovation Fund. We are beginning to see significant results. During the past two years alone, 20 spin-outs from UK universities were floated on the stock market with a combined value of over £1 billion. Since 1997, the value of collaborative research between universities and business has increased by more than 50 per cent. I could give many excellent examples of recent success stories. Isis Innovation, Oxford's technology transfer company, for example, has assisted in the formation of 49 university spin-out companies. I was interested to hear about Dundee University's spin-outs and the work that has been done there. The Advanced Manufacturing Research Centre, a $26.5 million collaboration between Boeing and Sheffield University, is working on ways of making the new Boeing 7E7 quieter and more efficient, cutting emissions by 20 per cent and fuel-burn by 18 per cent.
	My noble friend Lord Haskel stressed the benefit of technology transfer, as did other noble Lords, and the mutual benefits to universities and to business. He spoke about the matrix of innovation across disciplines—a theme pursued by other noble Lords as well. I agree with his comments on that.
	The noble Lords, Lord Dearing and Lord Wallace of Saltaire, and my noble friend Lord Judd also spoke about the regional dimension. I should point out that we now have a science council in every region, and six science cities are being developed through the RDAs, which is a good route through which to pursue these issues. There is no direct government role or funding in this, but there is the potential to access the science research infrastructure fund and the higher education innovation fund.
	If we widen our perspective somewhat, we will see that many of the factors relevant to our national research performance also apply at the European level. The growing development of a truly European dimension for science and research has been one of the less heralded aspects of European development. Nevertheless, we maintain that it has been a success story, and one that probably deserves to be highlighted more than it generally is. In the past two decades, the EU has steadily reinforced its efforts to promote and support research activity through a series of framework programmes. As a result, Europe has made significant steps towards the establishment of a genuine internal market for science and technology in which universities have played a major role.
	Nevertheless, I think we would all recognise that more needs to be done to strengthen the EU's research base. In particular, Europe needs to enhance further the environment for the basic research primarily undertaken by universities and public-sector research establishments. This in no way contradicts the Government's wish to see research contributing to competitiveness at the UK and European level. High-quality basic research is essential if the European science base is to remain competitive on the global stage, and it is an essential precondition for a research-intensive economy. Without a flow of innovative basic research, we have no hope of ever making Europe the competitive research-driven economy that we wish it to become.
	Of course, European basic research already has its strengths. Nevertheless, despite having an overall level of funding approximately equivalent to that of the US, the impact of European basic research is lower than that of the US when measured in terms of the top 1 per cent of the most cited papers. Despite recent awards, Europe still lags behind the US in the total number of Nobel prizes it achieves. There is widespread agreement that the fragmentation of basic research across member states and the absence of systematic Europe-wide competition for research funding are restraining Europe's ability to increase its competitiveness in basic research. As the noble Lord, Lord Hannay of Chiswick, said, there is no case for doing nothing. For this reason, the UK strongly supports the establishment of a European research council to fund science-driven research within the context of the next framework programme. The aim of the ERC is clear: to drive up the quality of European basic research by providing something that has never existed before, an arena in which all Europe's scientists can compete against each other for funding on a truly continental scale. I believe this generally has had the support of noble Lords contributing to the debate today.
	Obviously there are certain conditions which we feel an ERC would have to meet in order to achieve this aim of enhancing the environment for European research. It must, so far as possible, be effectively independent both from the European Commission and from member states and be able to pursue its own science-driven agenda, run by scientists for scientists. The noble Lord himself has been a key contributor to developing European policy in this area in the work that he undertook to select a high-quality team to serve in the inaugural Scientific Council of the ERC. He did an excellent job, which deserves the recognition of this House.
	The council, chaired by Professor Fotis Kafatos of Imperial College, is now getting down to work. We wish it well in the vital task which lies before it: to create a structure that will attract the very best researchers in Europe to seek ERC funding. Its success in this mission will make a major contribution to the future development of European science and in particular to the role that European universities can play in this development.
	A number of noble Lords spoke about the concept of the European institute of technology. I think that they all disapproved, including the noble Lord, Lord Patten, and the noble Baroness, Lady Thomas, who reminded us that just because something is labelled as part of the Lisbon agenda it should not automatically get the box ticked. The noble Lord, Lord Hannay, had some concerns about it, as did my noble friend Lady Warwick and the noble Baroness, Lady Sharp.
	We believe that the Commission's objectives are sound. The problem of Europe's poor performance in exploiting research needs to be tackled. Links between industry and universities need to be improved. However, we cannot see many incentives for industry or top universities to participate in the Commission's current model. In its proposal on Next Steps, the Commission should ensure proper consultation with business and universities on how best to achieve its objectives, including consideration of other options. The UK should be at the forefront of pushing consideration in those areas.
	I turn finally to the global position of UK research and how it is closely linked to the attractiveness of our universities to students from other countries. On that subject, I would like to make three main points. First, the international reputation of UK universities has never been higher. We remain strong internationally in terms of achievement, productivity and efficiency, second only in the world to the US, with a fraction of their overall spending. Where some countries excel in individual disciplines the UK has consistently sustained high performance across the broad range of scientific disciplines, from the biological sciences through to the arts and humanities. Any changes to the process of funding must enhance and not diminish that.
	A number of noble Lords spoke about the research assessment exercise. In particular, my noble friends Lord Grabiner, Lord Judd, Lord Howarth and Lord Haskel, the noble Lords, Lord Broers, Lord Norton, Lord Patel and Lord Dearing, and the noble Baronesses, Lady O'Neill, Lady Carnegy, Lady Buscombe and Lady Rawlings, each had a view. Of course, that matter was discussed a few weeks ago in a debate initiated by my noble friend Lord Williams of Elvel. I read Hansard on it yesterday and would recommend it to noble Lords, some of whom I know participated in that debate.
	We should recognise, as did my noble friend Lord Howarth, that since RAE was introduced 20 years ago, research quality has risen significantly. Now, more than half of all academics work in departments rated in the top five or five star 2001 ratings. In response to the noble Baroness, Lady O'Neill, we plan to continue, and will continue, with dual support systems for the reasons that she identified. Of course, we are about to consult on a metric-based research assessment system, with the object of making it less onerous on universities. I am conscious of the wide spread of opinions annunciated today on that. Obviously, the concept is to focus on one or more metric statistics that can be used to assess research quality.
	I assure my noble friend Lord Haskel that it is most unlikely that citations would be the sole criterion as an outcome from that. The working group is drawing up consultation proposals, which will be published in May with the hope that conclusions can be reached in time for the Pre-Budget Report. My response to the noble Baroness, Lady Rawlings, is that there should be a genuine and intense consultation process. On the basis of today's contributions, I cannot imagine that it would not be.
	I would stress that the Government see it as an imperative that any new funding arrangement will continue to reward excellent research of all types, from curiosity-driven to user-focused research. Any system should facilitate collaboration between different disciplines and must not squeeze out the humanities and social sciences—an issue on which my noble friend Lord Judd spoke with considerable passion. Consultation, I believe, is the appropriate form in which to explore the issue raised in particular by the noble Baroness, Lady O'Neill, to make sure that any change to the system does not create a potential for perverse incentives.
	I turn finally to the global position of UK research and how this is closely linked to the attractiveness of our universities to students from other countries. On this subject, I should like to make a few points. The UK publishes 13 per cent of the world's most frequently cited scientific papers and leads the G8 in terms of papers published and citations acquired per researcher. According to last year's survey of international research performance by Shanghai University, we have seven universities in the world's top 100, more than any other country except the USA and more than the rest of Europe put together. Various other equivalent statistics were quoted in the debate. No doubt many noble Lords will distrust to some extent university league tables of this sort, but nevertheless I believe that this and several other international comparisons give a clear indication of the esteem in which UK higher education in general is held across the globe. If that were not the case, UK universities would not be bringing almost £4 billion of export income into the economy.
	I should add that perhaps the most compelling indicator of the high international standing of UK universities is the number of overseas students, especially at postgraduate level, who choose to study in this country rather than elsewhere in the English-speaking world. At this point perhaps I may pick up the issue of health research funding, a point raised by several noble Lords, in particular the noble Lord, Lord Patel, and the noble Baroness, Lady Rawlings. Your Lordships will be aware that the aim of the proposals being considered is to maximise the impact of Medical Research Council funded research and the Department of Health's R&D funded research. This has enormous potential, but the details of the review are still being finalised and it is not yet clear whether we will focus solely on research funded by the MRC or whether the review will include aspects of health-related research funded by other research councils.
	In conclusion, over the past decade the Government have done much to foster research and development in UK universities. Since 1997 we have doubled the science budget. Funding is an issue that has properly received recognition by the noble Baroness, Lady Sharp, among others. We have invested with the Wellcome Trust over £2.6 billion in renewing our science research infrastructure and we are now investing more than £100 million a year in knowledge transfer and knowledge networks, and £100 million for research careers, including more for science PhDs. Our goal now is to increase the UK's total private and public investment in R&D as a proportion of GDP from its current 1.8 per cent to 2.5 per cent by 2014. Doing this will put the UK at the forefront of European countries and substantially close the gap with the US. We should recognise that that is a demanding target but an achievable one. We have done much, but there remains much to do. This year's Budget saw the publication of the next step in the Government's 10-year framework for science and innovation, including a number of proposed reforms to extend tax credits. I will write to my noble friend Lord Howarth about the basis of our concluding that that is the route we should adopt.
	We shall further develop the role of the Technology Strategy Board, create a large facilities research council and, as we touched on earlier in the debate, develop reforms to simplify the research assessment exercise. The noble Baroness, Lady Warwick, spoke of the importance of these commitments, in particular with regard to the next comprehensive spending round and funding for the third leg. The noble Baroness, Lady Rawlings, and the noble Lord, Lord Soulsby, raised the issue of better tax incentives for charitable giving for research. We debated the position of charitable remainder trusts, which the Treasury keeps under review, but, whatever their benefits, they have been associated in the US with estate duty planning.
	Our world-class universities have an integral part to play in—to use the words of my right honourable friend the Chancellor of the Exchequer—making,
	"Britain one of the most competitive locations for science, research and development, and for innovation".

Lord Patten of Barnes: My Lords, I thank the Minister for that comprehensive reply to what has been an extremely good and interesting debate. I am pleased that we had the opportunity to have the debate today and I am grateful to all noble Lords who have taken part in it.
	Following on from the point made by the noble Baroness, Lady Warwick, that we face a public spending review, I believe that we will return to that subject fairly regularly over the coming months because I suspect that higher education will not be unscathed as a result of that review. I hope that I am wrong.
	Obviously I cannot comment on all the points made. I am very pleased that Newcastle's aspiration to become a science city has been welcomed, and I hope that the Government will respond in the best possible way by opening their cheque book. The proposal for a European institute of technology has not received a standing ovation—not even a crouching ovation—and I hope that that will be noted in the European Commission.
	Perhaps I may finish by making a point about competition internationally. The noble Lord, Lord Hannay, made a valuable point about the extent of the crisis we face in Europe. It is a paradox that at the end of this period of extraordinary prosperity in Europe—the continent that discovered universities, for heaven's sake, if you leave aside Fez—we fetch up giving universities a lower priority and seeing the gap between ourselves and the United States open increasingly. I have often made speeches in the past about the gap in security spending between ourselves and the United States. I am much more concerned about the gap in spending on knowledge, research and scholarship. We have to be aware of it.
	I was in India a few weeks ago as the chairman of the UK-India Round Table. We were discussing the £2 million a year that the Government have made available for links between our education system and India. The next week, Mr Larry Summers, following our announcement of £2 million a year, announced that Harvard was going to provide a dozen chairs for Indians and provide free education at Harvard for everyone qualified from an income of less than $40,000 a year. The competition out there is extremely hot and we have to make sure that we invest enough in our higher education in the future. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Local Government

Lord Bowness: rose to call attention to the Government's proposals for the structure and role of local government; and to move for Papers.
	My Lords, I want to make it clear that, while I believe there is much to lament about the state of local government, I acknowledge that local government has many, many members dedicated to serving their communities and highly professional officers motivated by public service.
	Local government is still, despite the efforts of central governments of all persuasions, closely involved in the provision of our day-to-day services. Why, then, is public interest in local government elections so low and the turnout so abysmal? Neither government nor the public seem to know what kind of local government they want. Opposition parties always support freedom for local government and see it as a springboard for national power; parties in government tend to see it differently and want to use local government as an agency for the delivery of national initiatives, for which they try to take the credit and fail to provide the money.
	The system of financial support is so complicated that central government and local government can always make a case that the financial settlement in any year is generous or mean according to their position, but the evidence on the ground suggests to me that local government is generally underfunded, and has been for a long time. The public, for their part, want local control, but do not like differences in levels of services or local taxation.
	The party to which I belong recognises that the onslaught of previous governments on the power of local authorities went too far, even if it was in response to the very determined efforts of a minority of authorities that did not wish to recognise the traditional balance between central and local government, especially in areas of overall public expenditure. It is, however, nine years now—even if it seems longer—since there was a Conservative government, and we are now entitled to look at this Government's record and proposals.
	In 1997, the Labour Party came to power promising a renaissance for local government. What has been the reality? Even the "great Satan"—capping—remains in place. Local initiative is sapped by a plethora of guidance and codes from central government. The introduction of Cabinet government, while recognising certain political realities, has nevertheless led to the sidelining of a large number of council members and a reduction in the powers of the council itself. Elected mayors—and I do not criticise the individuals who hold that office, nor do I refer to the rather different arrangements in Greater London—were, I submit, a gimmick thought up by central government but have found no great resonance with the public.
	The Home Secretary wants to remove policing to a regional level, significantly reducing local authority involvement, all in the interests of efficiency—although what, in the light of recent revelations, is known about that in his area of responsibility, we can only wonder. He allegedly wants more local community involvement but his proposals will reduce the involvement of elected local members. Why does he not consider allowing local authorities to run truly local forces to engage in the matters that affect communities daily and let his larger, all-regional forces deal solely with serious crime or terror issues? Local authorities would then be responsible and accountable to their electorate for a force dealing with community policing and the aspects of criminal behaviour that impinge on our daily lives.
	Planning is, or should be, one of the key functions of local government. Here the Office of the Deputy Prime Minister has eroded local accountability. The involvement of regional bodies in the development plans is just one example. The planning system seems no longer to control development and protect local communities, rural or urban. The pronouncements of government suggest that the processes for the delivery of speedy planning consents—consents, not decisions—are the concern of house builders and developers, who have apparently achieved supremacy undreamt of a few years ago. What extraordinary thought processes have led to a situation where the guidance or code of conduct of local authority members can prevent ward councillors speaking or voting on an issue which concerns their ward, even if they have no personal or financial interest, while developers fund planning departments to help the OPDM achieve its central government targets?
	My attention was drawn to the property section of the Daily Telegraph of 11 February, two of whose items I will refer to. It said:
	"In Ashford, which has approved the construction of 3,500 homes in the past four months alone, Wimpey Homes has actually paid the authority to hire private planning consultants to push their massive planning applications through".
	The head of planning and development told the Daily Telegraph,
	"the council invited developers to make 'an additional contribution over and above the planning fee' so that extra staff could be hired to deal with the applications in the time required".
	In Milton Keynes, which, according to the head of development, last year fell 1,000 short of its government-set target of 2,400 new homes,
	"the council has handed responsibility for writing the crucial design briefs relating to street layout to developers. 'At the time, the step-change in pace was dictated to us, we simply did not have enough urban designers at the council to do the job'".
	What are we doing? The Government asked Sir Michael Lyons to examine funding and then to make recommendations on the future functions and form of local government. To this recipe for uncertainty we have been promised by Mr Miliband the prospect of a White Paper, at a date unknown. Will that again raise the prospect of restructuring? Are the Government determined to see the counties abolished? If they are abolished, will that lead to the amalgamation of districts? If that is the case, how do the Government reconcile that with their desire for truly local government? Will it lead to the replacement of the counties by some larger, regional-type authorities—assemblies by the back door? I do not believe that regional assemblies or authorities are a Brussels ploy. You do not have to go that far, only to Whitehall and the Office of the Deputy Prime Minister. Of course there is a case for local authorities working together on a regional basis. That can be achieved without destroying authorities and setting up remote, unwanted assemblies. The functions then remain in the ownership of local authorities. I am delighted that my party has espoused the idea—even if I am not delighted by the name—of super area agreements to make this possible. I am especially delighted that the idea probably comes from France and is one that I have put forward in your Lordships' House previously.
	We ought to remember that every amalgamation and reorganisation destroys an element of community. A new sense of identity has to be built. It is always built at enormous cost, and the quality of services hardly ever changes for the better. What does Mr Miliband mean by neighbourhood empowerment? Are we to see a programme of abolition and creation of larger councils, followed by some gimmick to try to convince people that control of their own services has come closer to them? If so, what are the financing, resourcing and management implications? How will neighbourhoods relate to local authorities? Are we to create parish councils by another name—in urban areas, perhaps, as well—giving services and functions to authorities previously thought too small to manage anything of significance?
	In some European Union countries, councils raise a far higher proportion of their finances locally and there is a commensurately higher voter turnout at elections. Local government finance is fraught with difficulty, but without providing a greater proportion of its own funds, local government will not attain greater status, greater accountability and greater interest from the public. That certainly will not be achieved by another round of restructuring, renaming and loss of further functions. The restoration of the business rate, subject if really necessary to some control of maximum, would be a significant step forward in redressing the balance between local income and central funding.
	A week away from important local government elections, all the parties have had their campaign launches. They and their manifestos illustrate the plight of local government. The national media interest is on the party leaders and what the results will mean for their fortunes. The national media publicity for local elections is all about Westminster, with little interest in their effect on the towns and cities concerned.
	I hope that the Minister will take the chance to share with the House the Government's thoughts on some of these questions, and to let noble Lords and the public know how they propose to achieve a local, accountable, responsible and financially viable system of local government, with a recognition of its status and place in the scheme of governance in this country as equal to that found elsewhere in Europe. I beg to move for Papers.

Baroness Scott of Needham Market: My Lords, I am grateful to the noble Lord, Lord Bowness, for tabling this debate, coming as it does at an important time for local government: the department is reviewing the structures of local government and Sir Michael Lyons is carrying out his work on its finances. Moreover, as we have heard, we are just a week away from important local council elections. The noble Lord was spot on when he mentioned the media preoccupation with Westminster and their treatment of local government elections as nothing more than a huge opinion poll. They seem quite oblivious to the fact that many thousands of people out there are standing for their council or are involved in the campaign because they genuinely care about their local communities, their library, their swimming pool and their streets.
	There can be no doubt that we have seen a long-running removal of powers from local government in recent decades, coupled with an increasingly centralised financial system and a straitjacket of control and regulation. The effect has been a system of local administration rather than genuine local government as exists in other European states. Decisions that are best suited to the needs and aspirations of the community that the local council serves are often not made and accountability therefore becomes blurred.
	What follows from that is increasing disillusionment with local councils. It is fascinating that surveys show that, even in areas where people highly value and rate their schools, libraries and leisure facilities, they often do not value the council as the institution that provides those things. This is compounded by the voting system. In many places, there are still local one-party states, in which not only the same party but often the same councillors are there for years and years. The danger is that that can lead to out-of-touch councillors and councils and, at worst, the development of favoured geographic areas and poor standards of behaviour. I certainly believe that there would be much less justification for heavy-handed performance management from the centre and bodies such as the Standards Board for England if the ballot box were a more responsive mechanism.
	Localism has long been a preoccupation of these Benches, so we do not come new to this, but we welcome the more recent interest taken by the other parties and the academic sector. We would like to see a genuine reversal of the trend—the removal of powers from the centre—so that local government is both genuinely local and real government. We have long believed that there should be a written constitution to define and protect all elements of our governance, whether it is the powers and roles of your Lordships' House or local councils. We would hope that any review of local government taking place might result in at least some sort of concordat in which the respective powers of central and local government could be defined and set out to ensure that each body is free to work within its agreed sphere. It is not the job of central government to micromanage local authorities. That does not mean that government cannot ever change anything; it means that local government would be involved in change and not have it imposed on it.
	The 2000 Act was a scandal whereby councils were forced to adopt new decision-making structures almost regardless of their views and those of the local people. Our approach would be for the Government to set out the powers and responsibilities along with broad principles of governance, but for structures and details to be determined by local circumstance. That would be very much the approach from these Benches to the Miliband review. The primary factor driving the boundaries of local government should be a combination of operational, financial and administrative factors, along with recognition and acceptance by the people whom each council is meant to serve. It follows from that that there is no simple single formula that can be applied to produce a uniform solution throughout the country. The key is to think about these key principles—community acceptance, financial and operational efficiency and genuine accountability.
	In general it can be said that the two-tier system of local government is not particularly helpful now, although we would prefer to see a presumption against a single tier. Counties are often too large to offer genuinely local delivery but, on the other hand, districts are often too small to offer many of the strategic services and they suffer from real diseconomies of scale. That can be reflected in the quality of service provided. The noble Lord, Lord Bowness, talked about the inability of some planning departments to deal with planning applications. They are simply too small.
	One could either have small building blocks that could be amalgamated where necessary through joint boards, or one could have larger, more strategic authorities and then devolution to recognise communities. We would like the system of local governance to maximise the levels at which communities and neighbourhoods can be involved in decision making and delivery. That would not mean that local areas would be forced to run their own affairs, but the option should be available for them to have the statutory right to take on delivery of certain services if they wished. The local authority could enable basic standards to be set and met, but local areas could decide whether they wanted to spend more on setting and delivering higher standards of service. These sorts of community councils could become joint providers if they wanted to, so economies of scale need not necessarily be lost.
	The key here is that a variety of mechanisms is required, because one size does not fit all. Urban areas have no history of parishing, so that solution would apply in rural areas, rather than in urban areas, but we could have neighbourhood committees of the local authority. There are also communities of interest, such as schools, libraries, housing estates and so on, and it is very important that people are involved in running those services. But we need to understand the scope and limit of that involvement, because the key question here is not just the people who use those services but those who do not use them. Why they do not use them is an important question but, even if they never use them, as taxpayers they have a right to be involved.
	That brings me on to the problem of the burgeoning quangocracy, whether through local trusts, regional boards or nationally appointed bodies. Such bodies are now spending more money than local councils, but they have very limited accountability.
	We on these Benches have been long-standing supporters of regionalism as a response to the fact that many issues require attention over a larger area than that which could be covered even by county councils. We accept now that there will not be directly elected regional bodies in the foreseeable future, but we think that there should and will be some regional dimension, because some services are simply too big for local councils. For example, there is a lot of agreement among transport academics that you need a regional dimension to transport planning.
	The Government's police reforms are a classic example of where the Government are not able to see that some elements of a service are large and strategic while some are best delivered locally. A joint board would have been a perfect way to deal with the police authority question, rather than the current wholesale removal of local powers to more regional bodies.
	The key to genuine local freedom lies not in structure, however, but in finance. The fact that 75 per cent of local government finance is now raised centrally is the biggest single controlling factor on councils. That must change; it is what we will be looking for when the Lyons review reports. We want to see the majority of revenue locally raised and business rates retained locally, underpinned of course by a light-touch system of government redistribution. We also want to see councils empowered to raise money in all sorts of new ways: through congestion charging, tourist taxes, the extension of business improvement districts and so on. We need a renaissance in local government. We need structural, financial and administrative freedoms that are there by right, not because central government have decided that a local authority deserves to have them because it has met some targets.
	Many of the knotty problems of society, such as anti-social behaviour and crime, have not responded to endless legislative change or government initiatives. The solutions are often local, not legislative, and could be provided if councils had the freedom to pursue them.

Baroness Byford: My Lords, I am indebted to my noble friend Lord Bowness for the opportunity to say a few words on the subject of local authorities and the way in which the Government appear to be setting themselves up in opposition to the whole idea of local choice, local accountability and local government. I entered this House nearly 10 years from the voluntary side of my party, following my work in and for many other voluntary organisations, particularly with WRVS in Leicester.
	At that time I also sat as a representative on Leicestershire County Council Social Services Committee, which drew together the various contributions from those bodies. On the political front, both at district and council level, councillors constantly prepared for and attended meetings, were constantly available for anyone in their ward or division, took some fairly difficult decisions from time to time, and were above all answerable to the electorate. Councillors often had a specialism, but they saw most of the papers and sat on committees that met regularly and had the great merit of keeping all members informed of the issues of the day. I believe that the cessation of big committees—education, housing and social services, for example—and their replacement, to which my noble friend referred, by cabinet, overview and scrutiny committees has reduced the number of councillors who are sufficiently in the know to respond well to their electors.
	I understand that the next move is the formation of local area agreements which will, or are intended to, bring together key local agencies as partners grovelling for "government" money in return for meeting "government" targets. These LAAs will involve all the councils within the area. They will also include the Countryside Agency and Environment Agency, primary care trusts, the police authority, the strategic health authority, colleges of further education, councils for voluntary services and so on. The regional development agencies and national bodies such as Sport England will be consulted and, as they say, "kept in the loop".
	The ODPM has issued guidance on how to bid successfully for government money under an LAA. It includes mandatory outcomes arranged in four basic blocks: children and young people, safer and stronger communities, healthier communities and older people, and economic development and enterprise. Despite the work of the noble Lord, Lord Cameron, who was wearing his rural proofing hat, there is no mention of the environment. I understand that a few councils may be trying to insist on including an environmental block, but it remains to be seen whether the ODPM will agree to it.
	It is bad enough that the environment seems to have been overlooked or deliberately excluded in the local area agreements, but that is only one manifestation of the shift from local to central and from elected councils to partnerships, which will be rendered impotent by the very breadth of their membership. How will the Government punish an area that fails to meet its targets? Will it simply be denied extra funds? Will that denial extend to the normal annual grants, and could there be any element of penalty by which the standard funds will be cut or delayed?
	The councils will have to commit themselves to their LAA while carrying on their normal duties. Those authorities with rural responsibilities are faced with the perennial problems of affordable housing, transport, planning and the delivery of services miles out of town. I recommend that noble Lords reflect on the very good report on rural housing that the noble Lord, Lord Best, and the Joseph Rowntree Foundation Rural Housing Policy Forum launched yesterday, which showed quite clearly that young people needing homes in rural areas are in a worse situation than their counterparts elsewhere and that urgent action is definitely needed to overcome that. They also recognise that the incomes of those employed in rural areas are frequently lower and yet home costs are often higher.
	House building levels are falling in rural areas. They are down by 4 per cent from 2003-05, compared with a 19 per cent increase in urban areas. The proportion of new house building that comprises affordable, usually subsidised, housing has been just 6 per cent compared to 16 per cent in more urban districts. The building of houses on greenbelt land in areas where local residents feel that there has been sufficient development, because water resources and their roads and railways are under strain, is decreed by Whitehall. They are seen to have regard for their own local services, or rather concern about them. How can local people hold their local representatives to account for that? New build is particularly unwelcome when the prices go too high for those born and raised locally and the demand is coming from people from other parts of the country who are fortunate enough to have the cash to have access to that type of housing.
	The Government have decreed that there will be free local transport for all those over 60, and the Prime Minister has indicated that schoolchildren will be eligible for further free school transport. I am told that the central funds supplied to enable that to happen are inadequate. Perhaps the Minister will comment on that. If it goes wrong, who will be blamed? It will be the local councillors if they take the balance away from other services; but curtailing expenditure to match central funding can result only in a restricted transport timetable.
	Planning has been mentioned by other noble Lords. Planning law and guidelines have been changing constantly. The result has been an upsurge in the need for training and familiarisation for officers and councillors and considerable expenditure on publications of various sorts. There seems to have been a by-product in the form of greatly increased pressure on the enforcement side of planning. That may be an unintended consequence, but it places great pressure on local council funds and results in misplaced dissatisfaction with the efforts of local councillors.
	The delivery of those services that are in rural locations is obviously more expensive and complex. Waste collection is now the subject of government targets. It costs more to send a lorry to pick up paper, tins or bottles from rural doorsteps than it does within towns. Ask any of the petrol companies whose delivery surcharges result in a steady closure of rural filing stations. Are those true costs taken fully into account when the financial settlements are agreed?
	I thank my noble friend for giving us the opportunity for this debate. One could be tempted to give up the struggle and allow central government to take over the running of local services were it not for their own ineptitude. The list is lengthy and expanding almost daily. This week alone, there has been the revelation of an overpayment of £4 billion over two years in child tax credits, £1 billion of which cannot be reclaimed. Then there are the 1,000-plus prisoners released onto our highways and byways, instead of being deported. We believe that "local" should be local. We urge everyone to vote at the local elections next week and to take into account the contribution that local councillors have made to their councils and to have some say in the way that their councils move in future.

Baroness Hollis of Heigham: My Lords, a previous Lord Acton said that there always should be a problem of Church and state. It could fairly be said that there always should be problem of local and central government and parliamentary sovereignty as against the legitimacy of the local mandate. There is also the point made by the noble Lord, Lord Bowness, about local decision making, with its implication of the risk of postcode lottery, as against national standards.
	Yet behind it all, we all share the belief, described by the noble Baroness, Lady Scott, that Britain is not a tidy place geographically and, therefore, different local government structures are necessary for different places. Local government is about that difference. If it were not, it would not be needed. That crucial belief that local government is about difference was dismissed as romantic nonsense in 1974, when a tidy two-tier structure was imposed on most of the country in the false belief that rural communities were essentially thinned-out cities and needed the same services delivered in the same way. At the same time, that was allied to a second false belief in the era of Baines and mega-American management-speak that bigger is better and more competent. Both propositions are false.
	Since then, the two-tier structure has increasingly been seen as deeply-flawed for much of the country; and most cities in the mid-1990s, under a previous administration—I give credit to the work of David Curry—became unitaries: Leicester, Plymouth, York, Nottingham, Bristol and Milton Keynes. But unfinished business remains, to which I now wish to turn.
	I declare my interest as a former leader of Norwich City Council. Some cities, such as Norwich, Oxford and Exeter, failed to gain unitary status during the Banham review, despite the good will of Ministers at the time. We still do not know why different standards were applied at different times to different places. Apparently, size mattered; except that the smaller Hartlepool became unitary and the larger Ipswich did not. Apparently, history mattered; so, tiny Rutland became unitary, yet the historic cities of Norwich or Exeter, county boroughs for 800 years, did not. Apparently, centrality mattered; so, Northampton was too central to the economy of Northamptonshire to become unitary, but, bizarrely, Leicester and Nottingham—which, one would have thought, were even more central to the local economies—were allowed to become unitary.
	Do those questions matter? Ultimately, structures are only a means to an end. We all accept that, but they do define a sense of place; they do enable or inhibit partnership workings; they do shape the delivery of local services; they do ensure responsiveness to local neighbourhoods, while emphasising the strategic vision and local leadership that cities, in particular, need. I suggest that a two-tier structure vitiates all that.
	Services that are interdependent, such as housing and social care, are splintered between tiers. Your Down's Syndrome adult son needs supported housing. Should it be city or county? Services that should be integrated, such as trading standards and environmental health, are overlapping now and concurrent. You buy a piece of mouldy cheese. Do you report it to county trading standards or to city environmental health?
	Services that should be focused, such as economic development, are duplicated. So the company considering relocation will approach whom, city or county? In my experience it will probably go to a unitary authority for the sake of simplicity.
	So under our present structures, some services are delegated, others are duplicated, still others are splintered, a few are concurrent and a very few are not done at all because they fall down the cracks between the two.
	I could go on. People living in the Norwich area, for example, who look to the city for services, are in fact run by four different local authorities, with different values, priorities and partnership arrangements, including a county council, which understandably does not have a single councillor from Norwich on its cabinet, meaning that many key financial and political decisions are taken without any first-hand knowledge or understanding of the region's most important city and the county's economic powerhouse.
	As the noble Baroness, Lady Byford, rightly said, rural communities face real problems of sparsity, where services cost more to deliver to small villages stripped of school, post office, bus, shop and pub. Norfolk County Council tries honourably and decently to meet those needs; it knows about them.
	A city's problems are no less real but are almost the exact opposite—problems of density and congestion, of litter and waste management, of late night safety, noise and street policing, of traffic management and car parking, of the need for strict planning controls, of housing pressures from those seeking jobs as well as homes in the city, support for the major national companies located there and care for a glorious heritage of historic buildings and medieval churches.
	The city is a regional capital expected to fulfil regional functions on the revenues of a rural district council constrained by the policies of a rural county council. How on earth can rural county councillors living 40 miles away in a small village comprehend a city's needs? How could I, as a former county councillor, vote sensibly on laying down yellow lines on roads on which I never drove? I might just as well have been in London taking that decision. It certainly had nothing to do with local government.
	The ODPM survey, State of the English Cities, shows very clearly that cities lead this country's economic regeneration except for three places in the south and east, Ipswich, Norwich and Hastings, which all happen to be non-unitary authorities. The survey shows that what matters to charge that economic growth is innovation, competition, business partnerships, transport connectivity, to use the phrase—the determinants of growth—all of which are severely constrained within a two-tier structure.
	The city, I suggest, would better serve its county if it could play to its own economic strengths, develop its own entrepreneurial capacity, attend to its local neighbourhoods, partner its local businesses and recharge its civic leadership as a unitary authority. So, equally, would the county—which does admirably with its rural services—gain if it was free to focus on what it knows and does best: developing services for a rural, scattered, low income and, too often I regret to say, low aspiration county.
	Even when an urban district is located within a two-tier urban county, services are confusing enough. Now add a city within a distinctly rural county on which rural standards are instinctively projected onto a city, add profound political divergence between the tiers and what is the result? No one knows who does what, to what standards, at what price and to what authority. Without such clarity there can be no accountability, and without such accountability there can be no meaningful local government. Two-tier local government in such cities means confusion, incoherence, inconsistency, sometimes ignorance, and duplication and disagreement. So are we then surprised that local government is run by the few people who can be bothered to stand and elected by the few people who can be bothered to vote?
	I do not know—perhaps my noble friend can help me on this—what criteria the Government will use when they consider these issues. Will it be population size, administrative savings and scope for increased efficiency, clarity and greater accountability for the public, community identity and history, or local preference of voters, business and voluntary organisations? I shall spend only a moment on the first two of those—the connection between size and competence—and shall suggest that that does not hold any more.
	First, I shall quote the Audit Commission's comprehensive performance assessments. Of the 1990s unitaries, more smaller authorities than large ones got three and four stars. Not only is it the case that large authorities do not do better but the reverse may well be true. What matters is not population alone—itself often the product of artificially constrained boundaries—but critical mass: the presence of a university, an airport, regional TV and newspaper companies, national business and a major teaching hospital.
	The second point about size is that functions have changed. The police are now run by a separate authority, schools are locally self-managed, children's services will be transformed by the new children's trusts, and further education has gone to the Learning and Skills Council. The purchaser/provider split has transformed local government, and, although a provider of services may need a minimum size for scale and efficiencies, the purchaser does not. What matters is civil leadership, a focus both on local neighbourhoods as well as strategic vision, and the willingness to engage in flexible local partnerships to meet different needs as they emerge. UDCs may be one such vehicle.
	I very much welcome the Government's willingness to ask whether for cities such as mine the current structure of local government is fit for purpose. Locally, the bid for unitary status has full cross-party support and, as far as I can tell, wide public and business support. Therefore, I am particularly grateful that the noble Lord, Lord Bowness, has given us the opportunity today to make the case for a new council which is integrated, effective, outward looking, proud of its history, rated by its citizens and fit for the challenges of the next half-century.

Lord Brooke of Sutton Mandeville: My Lords, it is a pleasure to follow the noble Baroness, Lady Hollis of Heigham, whose extensive experience in local government in Norwich and Norfolk far exceeds my 18 months at the London Borough of Camden, although in those far-off days when my party held Camden for the only time, 18 months there seemed like 18 years elsewhere.
	My noble friend Lord Bowness, whose local government experience in south London and in local government generally is as long as my experience was short, is to be warmly congratulated on the timeliness of the debate that he so ably initiated. The debate is an excellent instance of serendipitous self-regulation in your Lordships' House in that speeches of Conservative Members, whose choice of debate this is, alternate with impeccable symmetry with Members of the other two parties, themselves alternating precisely, too.
	Some six weeks ago, in a chance late-night conversation with a senior member of the Lobby, I said that the political climate was developing at least a whiff of the stench of a decaying government, which I could recall from the winter of 1978-79. He said, "Oh, surely not, Peter", but if I was wrong then, I think that I am nearer to being right six weeks later. It is against that background that a Government, whose earlier essays into local government reform at a national level have not met with spectacular success, are at least exploring another much more sweeping reorganisation. It is a tribute to the stamina of the Deputy Prime Minister that he is thinking of coming back for more.
	We had a Written Answer from Mr Woolas in late February to tell us that no decisions had been made but that a wide-ranging debate was going on and that the position would be finalised at about the same time as the publication of the proposed White Paper. That phraseology sounds more like a positive decision than a negative one. If the White Paper passes over the option, however, the option seems happily less likely to resurrect itself thereafter, as the outlook for the public finances worsens in anticipation of the Comprehensive Spending Review.
	The noble Lord, Lord Rooker, himself a veteran of previous local government debates in your Lordships' House—notably the paving debates that led to the debacle of the referendum in the north-east—said last night, on the Northern Ireland order on local government, that there would be no new money for the proposed reorganisation there. Reorganisations of local government on this side of the Irish Sea, however, do not come cheap.
	I appreciate that the Office of the Deputy Prime Minister may have embarked on its current review in times sunnier for the Government. I realise that personal preoccupation with their individual political legacies is beginning to clog up the arteries at the highest levels of the administration. I acknowledge that those members of the Government who most often have to sit examinations on the West Lothian question have not yet reached a pass mark, yet courageously but masochistically return to see if another answer will do better, so that the full business of devolution will be done and dusted.
	It will be interesting, when the Minister winds up, to learn precisely how the sub-questions being postulated in consultations will contribute, if at all, to resolving the continuing conundrum set by the Father of the House of Commons emeritus, Mr Tam Dalyell. It will also be interesting to hear if any advance in inducements is being contemplated by Ministers, beyond that of the housing offered in the regional government paving Bill. In the meantime, we on these Benches believe that greater devolution of power to local government, so that more decisions can be made nearer to those directly affected—always a sign of health in any human organisation—remains our watchword; one which, in these centralising times, is a better index of democracy and a better amulet against popular frustration.
	The rumours on the Rialto are of an emphasis on unitary authorities, shaded by further powers for unelected regional apparatchiks. When the regional government paving Bill was going through, I remarked across the Chamber that it seemed Orwellian to be holding referendums statutorily to set up regional assemblies when several regions had already created them without benefit of statute—a poor man's version, if you like. The noble Lord, Lord Rooker, who is nothing if not candid, agreed that it was a bit Orwellian. In a later Starred Question, I asked the noble Lord, Lord Bassam, whether he agreed with his noble friend on this point. As I recall, he said that he supposed that he agreed with his noble friend on almost everything. When the Minister comes to regional arrangements in her speech—which rumours in the bazaars have foreshadowed—it will be interesting to see if she agrees as well.
	Finally, there is a happy moment in the late Claud Cockburn's memoirs, when, after schools at Oxford, he goes to say goodbye to his tutor at Keeble, who sends him on his way with the words, "Up to now, Cockburn, your life has been punctuated by examinations; but from here on out you will have a clear run through to the grave". As the West Lothian question is alive and well, the Government have not yet reached Cockburn's sunny uplands. It still looks as if it will be a close run thing between the question's final answer, and this Government's arrival at the grave.

Baroness Maddock: My Lords, we are all very grateful to the noble Lord, Lord Bowness, for a good and timely debate on local government, particularly in view of the Government's intention to publish a White Paper.
	Today's discussions have ranged around many issues in which I have been engaged for the past 30 years. It was, in fact, 30 years ago during local elections in Southampton that somebody knocked on my door to ask me how I was going to vote, that I ended up being persuaded to join a political party. Since that time, I have not only been a city councillor, but a Member of both Houses of Parliament. I have dealt with Front Bench issues on local government. Last year, I once again became a democratically elected member of a council in Northumberland—and, oh, how I agree with the noble Baroness, Lady Byford, about internal arrangements on councils. I much preferred the system we had in Southampton to the executive we have today.
	During that time, I have not changed my views on the importance of local democracy in underpinning the health of our national democracy; the importance of local bodies that are accountable to those people who elect them; and the importance of openness and transparency in the way that democratically elected bodies operate. I have also not changed my mind about the fact that decisions should be made as close as possible to the things that are being decided upon and the people who are affected by them.
	Like many noble Lords today, particularly the noble Baroness, Lady Hollis, I firmly believe that it is not possible to devise a hierarchy of local and regional bodies below national level that will suit every corner of Britain. One size does not fit all. These principles and beliefs have underpinned my life in local government for the past 30 years and those of my noble friends on these Benches, many of whom have also been in local government. We have had a lot of criticism from other political parties because we sometimes do different things in different places. That is because the needs of my constituents in Berwick North are not the same as those I represented in the city of Southampton and they require different solutions. The noble Baroness, Lady Hollis, made this point.
	Underlying those different solutions should be consistent principles and philosophy. Over the years, I have found it difficult and frustrating to deal with the shifting sands. The noble Lord, Lord Bowness, made this point. Over the years, other parties in government seem to have changed their attitude to local government. Various pieces of legislation have come forward, we have seen much more central control and local democracy in England has been fettered, as many noble Lords have said today. That has meant that there is less opportunity for citizens to control their local environment and their own services. Hand in hand with that, turnouts in local elections have gone down. Several noble Lords have remarked on that this afternoon. My noble friend talked about the voting system, but it is interesting that if one talks to people on the doorstep who are not going to vote and asks them why, the answer very often is, "Because it won't make any difference". If we are going to reform local government, we have to make people have a different response.
	As noble Lords have reflected, recently there seems to be agreement across the major parties that local accountability and local involvement—we all tend to use different words—by citizens is the key to revitalising local democracy. I have even heard the Government talk occasionally about parish councils. They are very important, and we have to look very carefully at how they can develop their role in line with what people say they want, which is local accountability.
	It has not always been so. I can remember the days when the Labour council in Southampton railed against Margaret Thatcher, centralisation and capping. I can remember another place in the dying days of the Major government. As the noble Lord, Lord Bowness, said, we have had several years of this Government and, disappointingly, they have undone very few of those changes. In fact, many of us believe that they have compounded them. In recent years, we have seen a huge proliferation of partnership bodies, appointed bodies and quangos of all kinds that undermine local accountability and transparency even more.
	A very interesting study was recently funded by the Joseph Rowntree Charitable Trust. The report was called Whose Town is it Anyway? The State of Local Democracy in Two Northern Towns and was written by Stuart Wilks-Heeg and Steve Clayton. It concerned Burnley and Harrogate and dealt with many of the issues that we have touched on today. It is an in-depth study and I recommend it to noble Lords. There is a case study of a man who, like some us, got involved in a local issue and ended up being a member of an unbelievable number of bodies. Most of them not were elected, so he was not accountable.
	On finance, which my noble friend Lady Scott and the noble Lord, Lord Bowness, talked about, I am grateful to the study because it shows that a district council these days probably is accountable for only about 5 per cent of public spending in its area. If you go up to the county and unitary level and include police and fire authorities, you might get up to 50 per cent of the public spend under democratic control. That means that 50 per cent of the public spend in any area is not under democratic control—of course a lot of that will be health services.
	My conclusion from this and much other evidence is that any reform of local government must reverse many of the trends we have discussed. We want to see powers going down to authorities and not up. We want to see accountability, particularly for finance, where it is spent. We do not want central control on finance, but more independence for local government.
	I believe that these improvements will do more to revitalise local government than any grand structural changes to the size and area of local government. Any changes that are brought about should not be imposed from above; they should come from below and be the desire of local people who live there. I agreed with the noble Baroness, Lady Hollis, on that point. I also agreed with her about size. There are some very interesting figures about size in this study, and it refers to other studies elsewhere that looked at the size of local authorities. There is a lot of evidence from Europe and America that bigger is not better and that in fact sometimes, as the noble Baroness, Lady Hollis, also said, it can be worse. Interestingly, in England we have one of the highest ratios of people to an elected person and by far the lowest turnout in local elections in Europe. There is much evidence that larger units of provision can mitigate against democratic and community engagement, and that economies of scale sometimes throw up other matters that then require money to be spent on them. There is a very interesting example in this book that the larger the school, the more problems there are with bullying, truancy and so on, and then you have to put money into special measures to deal with that. Therefore, it is not always true that big is cheaper.
	There was a lot of evidence from a study by Denters in 2002, which looked at local government in Norway, Denmark, the Netherlands and here. There is considerable evidence that citizens living in smaller local government unit areas tend to express greater levels of satisfaction with the services such units provide and that they have a greater trust in the local politicians and officials than residents who live in larger municipalities.
	There are many other good studies on good local governments and many debates such as today's. We will soon have the Lyons report and the Government's White Paper. But it is clear to me from where I am in Northumberland, which is perhaps a little different from where the noble Baroness, Lady Hollis, is in Norwich, that we do not want any more grand local government changes. We are still recovering from people jockeying for places in the regional referendum—whatever one thinks about that; and we know that there are different views here. But, there is plenty of local government legislation on the statute book which could be used to give control back to local authorities, financial and other. Councils in my area need time to work together more efficiently on local matters rather than trying to respond to the Government and jockeying for place in reorganisations.
	One thing that happened recently was that the local authorities within Northumberland were not able to agree how they could work together on elderly people obtaining their travel passes—which includes me. It is clear that changes may need to be made, but please can they be underpinned by good principles? Can it not be a case of "one size fits all"? Can it be local? Can decision-making be transparent? I hope that I can hear from the Minister today some of the principles that underlie what the Government are doing and some of the evidence-based research that they will use to ensure that we do not go off in directions that end up with us having to reverse measures in future years. That has been the sorry history. We need consistency in local government—certainly in my area.

Baroness Hanham: My Lords, I thank the noble Lord, Lord Bowness, very much for securing and introducing the debate. I congratulate him on putting his finger firmly on a number of serious areas of current concern about the structure and powers of local government and its make-up, the vagaries about its finances and, as other speakers have mentioned, the imposition of administrative means of running councils—such as cabinets, which have not been widely welcomed and have left many councillors adrift with insufficient knowledge of what is going on.
	We have had some excellent speeches this afternoon. Many of them have demonstrated an underlying frustration not with local government, but with what is going on in it—its inability to deliver what it wants for all the reasons that have been put into words today. My noble friend Lady Byford demonstrated clearly the problem in rural local government with housing—the inability of local authorities, including county councils, to have real control. I was fascinated by the speech of the noble Baroness, Lady Hollis, which clearly brought home the difficulties of running city government. She must have been a great leader when she was there and clearly enjoyed it. Unfortunately, my noble friend Lord Brooke is not still running Camden council—it would be a great deal better if he was. He gave us his usual words of wisdom about the West Lothian question. The noble Baroness, Lady Maddock, also demonstrated some of the frustrations that we feel.
	I must declare an interest as a currently elected member of the very excellent royal borough of Kensington and Chelsea. I am standing for re-election, so I am thick in politics at the moment and hearing what people in the area are saying. As our royal borough is so excellent and is running such great services, I do not receive many comments about problems associated with the local council, but one of the main subjects raised is the congestion charge and the inclusion of the royal borough within it. That was resisted strongly by the local council—by councillors, by residents, by anti-congestion charge groups and, overwhelmingly, by respondents to at least two consultations.
	I see the noble Lord, Lord Bassam, muttering in the ear of the noble Baroness, Lady Andrews, that that has nothing to do with local government, but I say that because, as a result of the complete lack of attention paid to the views of local people by the Mayor of London, there is enormous cynicism about the value of democratic involvement. The local authority is unable to protect its residents from the wilful decisions of the strategic authority. That is of no benefit in increasing the number of electors who will turn out to vote. They think that it is not worth it because no one—certainly not the Mayor—pays any attention to what they have said. Why should they bother? That is terrible.
	Even in London, the Mayor is seen as remote, out of touch, interfering and uncontrollable by the Greater London Assembly. It is no surprise, with that example, that elected regional government was comprehensively rejected. The noble Lord, Lord Bowness, touched on the problems resulting from the Government's unremitting desire to meddle with the structures of local responsibility by forging ahead with moving more and more responsibility to non-elected assemblies, including matters that fundamentally affect local people, such as—I realise that, as it stands, this is strategic—planning, housing, economic development and transport. There is also the extremely overhasty and ill considered removal of the police to a regional level. This is despite the electorate's antipathy to the remoteness of bodies based at regional level, whatever that really is.
	I return to the Mayor of London, who is much on my mind at the moment, because he is also seeking to take on a strategic role for housing and planning, which are not currently his responsibilities. The Government are now considering these proposals as part of their wider review of local government structures and responsibilities.
	We have heard about the wider review. We are being told that it will be subject to a White Paper in, I believe, July, and we are led to understand that it will build on the extended remit given to Sir Michael Lyons and his inquiry, and on the very undercover proposals for wholesale structural reform which emanated from Mr David Miliband. The Government originally hotly denied that these proposals existed. They came to light only as a result of a memorandum leaked to the Daily Telegraph in November, and have had some limited exposure—more by gossip, I am bound to say, than by any formal consultation.
	I remember, when the memorandum was leaked, inviting the Minister to comment on what I described as the Miliband review—I am glad to see that the name is now sticking—but that invitation was without success. A Miliband review there surely was, and what is now being demonstrated as a result of that would mean, as other speakers have said, a really fundamental shake-up of the current structures of local government. The imposition of unitary local government across England's 34 counties, inevitably involving the loss or absorption of counties and districts into units of an unknown size or geography, or however they were going to be structured, would inevitably reduce the number of councillors. In other words, there would be a massive shake-up, and for what purpose?
	As other speakers have said, local government should by definition be local. All parties are signed up to localism. But, to this Government, localism seems to be local beneath regional. I must tell the Minister that such reorganisation is not wanted, and there appears to be no reasonable rationale to justify it. It would deliver nothing but the loss of our shire counties, and would be massively expensive.
	It is estimated that to create one unitary authority for each county would cost at least £1 billion per new authority—or between £200 and £350 per household—just under £2 billion for two authorities, and £3 billion if there were three. What a waste of taxpayers' money, although that would not be the first instance of that for this Government. It has also been suggested that local elections in 2007 would be scrapped while these proposals were being developed. The Minister may like to comment on that, because that is a very firm rumour. That would be a further denial of the important role of democracy.
	Are the Government intending to push ahead from a White Paper to legislation without proper debate or manifesto proposal? Even Phil Woolas, the Minister in the other place, is reported to have said that there is no clear democratic mandate for any structural overhaul. The Government have a very poor record of recognising the important impact of constitutional changes. They have a rotten grasp of the importance of history and tradition, and I hope that the Minister will give a clear commitment today to ensure that any proposals that emanate from these reviews will be put to the electorate before they are implemented.
	While these plans are being gestated, further changes are being made to the powers of local government. Not satisfied with taking into the bailiwick of the Treasury the Deputy Prime Minister's responsibilities for housing by instigating the Barker report, the Chancellor has now gone a step further and asked her to undertake a review of land planning use and planning policy. While there were many good things in the initial Barker report, the maintenance and control of the development of housing by local authorities was not one of them. It does not augur well for Barker's views on planning. Housing and planning are matters of immediate local concern.
	The increasing reduction in local accountability for planning decisions, as highlighted by my noble friend Lord Bowness, and the reduction in the concept that decisions about things that matter to local people should take place at local level are becoming more apparent every day. That this is happening is increasingly being noticed by the people who matter—the electorate. However, the electorate have so far had no opportunity to consider whether they want radical changes made to the level of government which affects their lives most.
	This Government appear to have decided that devolution to the local level means devolving only from government to the regions. As has been made clear on many occasions, a Conservative government will sweep away the apparatus of regionalism. Regional assemblies would be abolished and their powers over planning, housing, transport and all the other myriad bodies that are parasitically attached to them would be returned to local control.
	This Government have a propensity for reorganisation, or perhaps more accurately for what they call modernisation, in all areas of public service. Experience from the health service, in particular, suggests that a little change at a time would be more beneficial than attempting to make fundamental changes all at the same time, finding that they do not work and making further structural changes before the last ones have been given any chance to work. The Government's intention with local government seems to have the same danger signals. Decisions on housing, education, planning, economic viability, transport and health all need to be sensitive to the local communities, and not taken further from them by the Government. There is a real role for local authorities to play. They must be given the opportunity to do that. It must be left with them at a local level.
	We have heard much today about the value of local councillors. Being one of them, I hesitate to add my voice to that. Local representation, and the fact that people are committed to helping and working with their local communities, is one of the most valuable assets that we have in this country. We prejudice that at our peril. There is a very real danger that local government is becoming completely disconnected, for the reasons that I have mentioned, from its local community. If we are not careful, we will find that local people will not want to represent their local communities. That would be a disaster.

Baroness Andrews: My Lords, this has been an extremely thoughtful and good debate. Like all noble Lords who have spoken, I am very grateful to the noble Lord, Lord Bowness, for all the experience that he has brought to this debate and for giving us the opportunity to exchange views. There have been excellent speeches from all around the House. I particularly pay tribute to the contribution from my noble friend Lady Hollis, which, as has already been remarked on, was the tour de force that we have come to expect. She is now moving into another area—where we had all better watch out.
	I welcome the opportunity to congratulate noble Lords on their powerful advocacy of the value and purpose of local government. I pay tribute, as many have done, to the quality, the leadership and the commitment that go into it and the value that it represents. Somewhat to my surprise, there is consensus on a series of issues across this debate. We have agreed—I certainly include myself in this—on the importance of strong local government and the need to take decisions at the most local level and at the right level. We have agreed the absolutely vital importance of engaging the citizen and of reconnecting the citizen to local government and thereby to national government. We have agreed that whatever changes might be anticipated, they should be driven from below and not imposed from above, and that there are wide geographical and political variations across our communities which must be reflected in the organisation itself.
	This debate comes at an important time in local government. I hope to be able to pick up on the main themes and to reassure noble Lords on our approach to the whole question of what it is right to do now, and what should influence our decisions. Much of what we are doing should be not only reassuring, but positively encouraging to all noble Lords who have raised these issues today. It is an important time not least because of the local elections. Again, I hope that people will turn out in their millions to vote; I hope that people will bother to vote. That, of course, is partly why we are having this debate.
	It is no secret that in the summer we intend to publish a local government White Paper. That will be about connecting local government to local people and developing better relationships between local and national government. Noble Lords would not expect me to pre-empt what will be in the White Paper. The discussions on it have been extremely wide-ranging—there is nothing covert here and I continue to defend the point that this is not a review. We have engaged with all areas of local government, with business and with the voluntary sector to discuss the options of what may be in front of us. I shall take the opportunity today to set out what I can on those issues. I shall answer as many detailed points as possible, but I may find myself writing to noble Lords in the usual way.
	I shall start where the noble Lord, Lord Bowness, began, by addressing the common concern about the neglect of local government in terms of how people respond to it, what that means in terms of disengagement from formal democratic politics and how serious the problem is. We should be clear that this is not the same as people being apathetic; they are not. They are deeply concerned about a whole range of issues that affect them, whether it is the environment, social care for the elderly or the quality of education. But as Sir Michael Lyons noted in his report, there is a genuine ignorance of what local government does and what it can do. At the same time, society is changing in all sorts of ways. People are better educated, more articulate and, through technology, able to obtain information and exert influence; I am talking about e-enabling, something that we have never been able to do before.
	We face an uncertain environmental future and stubborn inequalities in society, but at the same time we have new tools and new ways of looking at these things. As a government, we have tried to respond to these challenges over the years. As part of that, we need to debate the future shape and nature not just of local government, but of local governance. Let me say to all noble Lords who have raised these questions in different ways—here I mention the noble Lords, Lord Brooke and Lord Bowness, the noble Baroness, Lady Scott, and my noble friend Lady Hollis—that this is not a debate about how to centralise power in the hands of Whitehall and it is not a debate about how to impose regional assemblies by stealth. It is not a debate about imposing anything on local authorities either by stealth or openly, and it is not about a conspiracy to abolish counties or districts. It is a debate about how our future local government—and local governance—can be best equipped to do the job that it wants to do and can do best, a point made by the noble Baroness, Lady Hanham. This is all about developing the role of local government as a shaper of places.
	The Office of the Deputy Prime Minister is a key partner of local authorities in creating sustainable communities. Over the past seven or eight years, we have tried to achieve a balance—not sapping local authorities as suggested by the noble Lord, Lord Bowness, but strengthening them in relation to their functions. We have created strong national standards in the form of CPA and best value and so forth, but we have accompanied those with a significant increase in resources. Since 1997, the increase in government grant for local services has been 39 per cent in real terms. But even more important is increasing the capacity of local institutions through initiatives such as our capacity-building programmes. The results are there to see.
	The CPA framework has been assessed by the Audit Commission—I pay tribute to the work of the noble Lord, Lord Bowness, on this. Seventy per cent of councils are judged to be improving well or strongly, and 68 per cent of councils have achieved a three or four-star rating and, given the efficiencies, are delivering more for less. This year, there has been a council tax increase of, on average, 4.2 per cent. The councils should be congratulated on all these achievements. We have seen the effects in the outcomes—for example, the number of 15 year-olds achieving five or more GCSEs at grades A* to C has gone up by 20 per cent since 1997. So it is clear that local authorities have responded to the challenges.
	The context itself is more challenging because people's expectations are higher and they are becoming increasingly adept at articulating them, at complaining, at knowing their rights and at seeking influence. We cannot leave education only to the teachers. Whether people are patients, parents or consumers, we know that they want to be able to shape and influence the services that they receive. I am entirely at one with the noble Baroness, Lady Hanham, on that.
	When we talk about the power gap, we mean the gap between what people want to be able to do and their sense that they do not have access to information and access to influence. Our response has been the idea of double devolution. This is certainly not devolution simply to the regions—and I shall briefly come on to that later—but devolution to the town halls and beyond, to communities and to individual citizens. We want to ensure that the decisions that affect people's lives are taken at the lowest possible level. I think that there is consensus around the House about that, whether we are talking about individual budgets for disabled people or a community call for action which allows people to say when they think services are not coming up to scratch and to do something about it. We can see something like that in the Police and Justice Bill.
	When we refer to what we can achieve at the neighbourhood level—which is where people live—there is a very practical and simple agenda. Whether we are talking about extending the neighbourhood management model so that we can see the kind of transformation that has occurred in Broadwater Farm, or whether we are talking about the neighbourhood policing developments, where we want to see a neighbourhood team in every community, the agenda is extremely practical.
	I turn now to the role of local government and the wide-ranging debate that we have had about what we see as the way forward. Local government in today's world has to have strong and visible leaders. It has to be not only a provider or a commissioner but also a shaper of places and a promoter of well-being—a very radical power—and it has to do this in a way which takes account of the circumstances of an area and its specific challenges, whether it is a rural area or an inner-city area. Whether you look at Corby or Gateshead or Bedford, local authorities are positing a vision for their local communities which they may see mediated through the arts, new industry and wholesale development.
	For that role to work, we need strong and self-confident local government—that is why we established the Leadership Centre for Local Government—but we also need accountable government. The Local Government Act started that process and, of course, introduced the leader and cabinet system and the elected mayors. I have not seen in any of the responses to our debate so far on the future of local government that people are calling for the return of the committee system. We have seen clearer executive leadership, and we need that. We need a choice of models of governance, specifically to reflect the sense that places are different. We also need stronger scrutiny.
	I should say to the noble Baroness, Lady Byford, that we are very much committed to reinforcing a distinctive role for local councillors, neighbourhood champions, leaders and advocates. The point about local area authority is that it gives more certainty and transparency in a very confusing system of hundreds of funding streams being brought together in partnership, with local authorities at the heart. That is why so many local authorities have come forward in the past year and have demanded to be a part of that.
	In the debate, we will of course have to look at the structuring and the way in which services are being delivered. I want to reassure the noble Lord, Lord Bowness, in particular, that driving this is not only the communities' expectations for a more effective and responsive system, but an increasing appetite among some areas of local government for a more coherent and simpler system.
	This is a genuine debate about whether to open the door to reorganisation of the 34 two-tier English counties. It is not about imposing a single unitary system. It is the opposite of that; we are looking at what local authorities say that they need in order to deliver the benefits and services which are so badly needed. That is why the ministerial dialogues and round-table events have spread so far and wide across this constituency. It is not about structure for its own sake or about a battle between the supremacy of counties and districts; it is about whether we can respond in the future to changing needs. One size does not fit all and that is one of the principles that drives us. No decision has been taken about whether to go for reorganisation of the two-tier structure and we will continue the dialogue until we come forward with the White Paper.
	I say to my noble friend Lady Hollis, who made a magnificent speech, that we are looking at criteria and considering the issues that she mentioned. We must consider costs, because the benefits must outweigh the costs. We will have a full consultation on the White Paper, followed by a full debate.
	Let me say to the noble Baroness, Lady Hanham, that we expect and intend the 2007 elections to go ahead. We do not want to impose anything.
	The noble Lord, Lord Bowness, raised important questions about planning which point to the ways in which local authorities are responding and using their powers. They are using a system of planning that is more open and plan-led; they have a much more certain grasp through local development frameworks of what they are doing and they have to be responsive through the statements of community involvement to the local population in a way that they have never had to be before. That is a great strength in the system. But the noble Lord is right to raise those issues.
	The noble Baroness, Lady Byford, was concerned about the way in which planning is being delivered. We have put £600 million into the planning delivery grant to boost the capacity of local authorities to plan more intelligently for more quality for a greater number of people.
	On the regional agenda, I do not have to tell this House that we have no plans to hold further referendums until a region expresses an interest, but that does not mean that we do not commit ourselves to using what we have in the regions to reduce inequalities and promote economic growth across our country. With regard to the regional assemblies, RDAs and government offices, there is a lot of Conservative authority support.
	We must see how we can connect that agenda with the new agenda for cities. As my noble friend said, our cities drive our economic agenda, our innovation, our skills agenda and employment. We want them to make the most of what they can do because, although we have seen a renaissance in our cities, we are still not doing as well as European cities. We are still not in the same league and we need to be, for the sake of our young people. We are asking the eight core cities what is holding them back. We want them to give us a business plan for change and tell us how we can provide more support for ensuring that our cities and our city regions—which are so influenced by the cities and have so much to contribute—make the most of what they can do.
	In relation to what the noble Baroness, Lady Byford, said, our rural areas are just as important. The work of the Affordable Rural Housing Commission and the Joseph Rowntree Foundation points to the challenge of reinforcing the vitality of our villages and market towns while meeting a very diverse need which is local but has to address the wider issues of economic growth as well.
	I have not been able to address all the issues that have been raised, but I hope that this debate is the beginning of a longer conversation in this House about the White Paper, the GLA review and whatever will come out of them.
	I reiterate that, whatever changes we make, they will not be imposed or made covertly; they will have been brought to our notice because the evidence suggests that there is a better way of doing things. I end on that assurance. I again thank the noble Lord, Lord Bowness, for creating this opportunity for a very good debate.

Lord Bowness: My Lords, I thank all Members of the House who have participated in this debate. I thank particularly the Minister for her reply. I am sure that all who have taken part in the debate will have taken comfort from her assurances that changes will be driven from below and not imposed from above. We will carry her words away with us.
	I remain concerned by some of the planning practices to which I referred. I understand entirely the concerns and frustrations expressed by the noble Baroness, Lady Hollis of Heigham, about the status of Norwich. Most people apart from a few diehards in the counties at the time would have conceded unitary status to the former county boroughs outside the metropolitan counties, but that is not an argument for unitary status everywhere. It does not follow that two-tier government should be abolished everywhere; that falls into the one-size-fits-all trap. Perhaps it is a heresy to suggest—it will no doubt be greeted with derision from all quarters of the House—that the pre-1974 structure of county boroughs, municipal boroughs and urban and rural districts had something from which we could learn in terms of flexibility and meeting the needs of different communities in different parts of the country.

Baroness Andrews: My Lords, I clarify that I said that we expect and intend the 2007 local government elections to go ahead.

Lord Bowness: My Lords, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Energy Efficiency (S&T Report)

Baroness Perry of Southwark: rose to move, That this House takes note of the report of the Science and Technology Committee on Energy Efficiency (2nd Report, HL Paper 21).

Baroness Perry of Southwark: My Lords, as chair of the sub-committee that produced this report, I express my warmest thanks to its Members. Their expertise and companionship were equally valuable. I thank also our specialist advisers, Professor Roland Clift of the University of Surrey and Dr Jonathan Radcliffe, and our excellent Clerk, Dr Christopher Johnson. My thanks are due also to the many people who helped with our visits to the Building Research Establishment, Leicester City Council, Durham University and the Flagship House in Knightsbridge. We have a debt of gratitude also to our embassy colleagues in Sweden and Germany, and to our kind hosts there on our visits.
	Energy efficiency is everyone's business, not just that of scientists and engineers. We are all consumers of energy and contributors to the carbon emissions that threaten our planet. The 2003 energy White Paper set out a strategy for reducing these emissions and, in particular, for meeting three major targets. The first was the Kyoto Protocol obligation on the UK to reduce its emissions of greenhouse gases from the 1990 level of just under 210 MtC, equivalent to an average of 183.5 MtC in the period 2008 to 2012. In 2004, emissions already stood at just under 180 MtC, so we are currently meeting our Kyoto target, although, in September 2005, Friends of the Earth claimed that the UK would in fact breach it. The second was the Government's domestic target, which was, by 2010, to reduce carbon dioxide emissions by 20 per cent below their 1990 levels. The latest review of the climate change programme accepts that we are now unlikely to meet that target. Thirdly, it is the Government's long-term aspiration to reduce UK emissions by 60 per cent by 2050. Whether that is attainable is anyone's guess.
	This report is the committee's second detailed examination of the major themes of the energy White Paper, following on from the 2004 inquiry chaired by the noble Lord, Lord Oxburgh, into the practicalities of renewable energy. Both the Government's promotion of renewable, low-carbon electricity generation and their policies on reducing energy use are key to meeting the carbon targets. Both reports cast considerable doubt on the feasibility of these long-term targets and the effectiveness of the policies currently in place. The fact that the Government have now had to admit the unlikelihood that they will meet their domestic 2010 C0 target provides some justification of the committee's scepticism.
	The Government's responses to both reports have been extremely disappointing. In the words of the committee's annual report,
	"the response to a large extent simply described at length existing policies, initiatives and instruments, without appearing to grasp the strategic vision underlying our Report".
	It is to be hoped that the current energy review, chaired by the Minister, Malcolm Wicks, who gave helpful evidence to our sub-committee, will provide an opportunity for this fundamental rethink. If not, the Government's policies on energy will be doomed to failure.
	Our report begins with an attempt to define energy efficiency, and to understand what it can realistically achieve, more precisely than the Government have done so far. This might seem like an academic exercise, but it underpins the rest of the recommendations. Energy efficiency is fundamentally a technical measure of the proportion of energy within a fuel that is converted to a given output. In this technical sense, it says nothing about overall energy consumption or carbon emissions, so it is a big leap from this technical definition to the Government's aim of achieving absolute reductions in the UK's energy consumption to reduce carbon emissions, fuel poverty and so on.
	An example of this would be if you bought a more economical and efficient car; the energy within a fuel would be used more efficiently, but that does not mean that you would end up using less petrol—you may simply drive further, and end up using the same or more fuel. As Professor Paul Ekins, of the UK Energy Research Centre, told us,
	"increased efficiency in the use of a resource leads over time to greater use of that resource and not less use of it".
	This may explain why, as we say in paragraph 3.7 of our report, while most developed countries have seen improved energy efficiency in recent decades,
	"there appears to be no example of a developed society that has succeeded in combining sustained reductions in energy consumption with economic growth".
	This is the scale of the challenge facing the UK.
	The Government have no clear definition or measure of efficiency, and it is hard to avoid the conclusion that if they did—for instance, if they measured energy efficiency in terms of the absolute reduction in the consumption of delivered energy—they would be setting themselves up to fail. Despite a significant fall in industrial energy use, overall UK consumption of delivered energy continues to rise slowly but steadily.
	What does energy efficiency deliver? In the memorable words of one government official, quoted in paragraph 2.28, energy efficiency savings are,
	"real relative savings . . . genuine reductions on what would otherwise have happened".
	That sounds like a world of make-believe, of models and projections—or guesswork.
	Does that matter? A case in point is our statement in paragraph 2.49 that the UK had already met its Kyoto obligations before the end of the 1990s,
	"largely for structural reasons and because of changes in the fuel mix".
	In their response, the Government said that this was "not the case", and that such changes had played only a small part in a reduction,
	"against a Business as Usual baseline . . . estimated at about 60 MtC".
	But this is of course a reduction against an estimated "baseline"—in other words, something totally hypothetical. On another Defra webpage a statistical release states:
	"The fall in emissions in the first half of the 1990s is associated mainly with greater use of gas in electricity generation and increased use of nuclear-generated electricity. Both displaced coal use".
	That is exactly the committee's point. At every stage you have to peel back the layers of intellectual confusion—sometimes, I fear, even spin—before you get to hard facts.
	The committee's clear message is that we need simplicity and strong leadership: clear definitions, clear measures, and institutions and policies shaped accordingly. It will be clear from what I have already said about our findings that we feel the country is a long way from that. The most glaring source of confusion is the division of responsibility for energy policy between two departments, the DTI and Defra. Why does one department sponsor the electricity-generating industry while the other is responsible for attempts to reduce electricity consumption? And why, when the DTI is responsible for power generation, does combined heat and power fall to Defra?
	The stock answer is that responsibilities have to be divided somewhere, and that mechanisms for achieving effective co-operation, such as the Sustainable Energy Policy Network, work well. This was what the noble Lord, Lord Whitty, said when he gave evidence to us as a Defra Minister before the election, but it is notable that once his ministerial shackles were off, in the debate on our report on renewables in June last year, his perspective had changed. He commented:
	"we have not yet got complete cohesion in government on the matter".
	He also argued passionately that:
	"We ought to be absolutely clear that the prime objective of energy policy must now be a reduction in the carbon content of our energy sourcing and use".—[Official Report, 23/5/05; col. 1797.]
	That is exactly the point made in our report, which sadly was rejected by the Government.
	On 29 March the committee took evidence from the DTI Energy Minister, Mr Malcolm Wicks. On departmental co-ordination he commented:
	"Defra stands right behind me on these issues, and I have the bruises to prove it!".
	He was at pains to point out that it was a joke, but many a true word is spoken in jest.
	The confusion of responsibilities is repeated at every stage lower down the scale in the proliferation of agencies, networks and incentives in the field. We have grave concerns about that. To take one example, which we highlighted in our short follow-up report, we recommended the example of the Swedish local investment programme, a simple scheme that offered grants towards innovative local projects designed to fulfil a range of environmental and social objectives. It was highly effective in stimulating innovation, achieving reductions in emissions at a cost of around £10 per tonne of carbon—significantly less than the current cost of carbon offsetting schemes. The Government, however, did not accept our recommendation that they should follow the Swedish model, stating:
	"The UK Government funds a number of delivery programmes which deliver the same climate and energy outcomes as the Swedish model, however the key policy areas (energy efficiency, energy supply, renewable energy and transport) are delivered by different Government departments, therefore responsibility for these programmes is also distributed across these departments".
	We find that reply disappointing in the extreme. We comment in our follow-up report:
	"The fact that responsibility for delivering related policy areas is divided among different Government departments does not, in our view, justify the Government in resigning themselves to fragmented and confusing policy delivery".
	What are our recommendations for the way forward? We need greater clarity at the top, clear and measurable targets, simpler lines of responsibility and more effective policy delivery. The report is full of constructive suggestions, and we hope the Government will be willing to listen to some of them.
	At paragraph 5.33, for instance, we recommend that earmarked funding be made available to finance innovative, energy-based school projects, such as the small wind turbine installed at the Eyres Monsell Primary School in Leicester. Children there were able to monitor the output via computers in the main entrance, and were impressively well informed about the turbine's performance. If we are to encourage a new generation of responsible energy users, we need more of this. The government response totally misses our point that that was about educating children.
	We also looked at economic incentives. There is no doubt that price is an effective incentive. The fact that, following recent rises in oil and gas prices, renewable power and microgeneration have become so fashionable and widely reported is no coincidence. But at the moment, the more electricity you consume the less per unit it costs you. In other words, there is a perverse incentive to use more power, not less. We recommended that the Government look at tried-and-tested alternatives, such as the "lifeline tariff" model. You get an initial tranche of energy at low unit cost, sufficient to meet basic needs, and the power that you consume in excess of that increases progressively in price. That deals with the problem of the elderly lady living alone in her council flat and paying the maximum price for the small amount of energy that she uses, whereas the young man with all his electronic toys is actually paying less, the more electronic toys he acquires and uses. The Government rejected that recommendation as well, stating that they were opposed to,
	"direct interventions in the market".
	That is rather surprising, coming from the Government who devised the renewables obligation, the energy efficiency commitment and a host of other initiatives that directly intervene in energy markets.
	What about building standards? We expressed alarm over the extent to which the higher energy efficiency standards contained in new building regulations were actually being enforced. The government response concedes that there is a problem, but once again offers no concrete assurances that the problem will be addressed, for example, through increasing the resources available to local authority building control sections, or increasing the training of building inspectors. Instead, the government response tells us that the widespread non-compliance with the 2002 changes to building regulations in fact,
	"revealed that less than 5 per cent"
	of the expected reductions in carbon emissions have been lost.
	I have tabled a series of Questions for Written Answer in an attempt to get to the bottom of where this 5 per cent figure came from. The most recent Question asks whether the Government now accept that it is inaccurate. In case officials are uncertain of the answer that they should give, I can tell them that the answer is "yes". The official line is that the figure is taken from a 2004 report by the Building Research Establishment, but I have an e-mail from one of the authors of that report, saying:
	"We have looked into this and do not know how this figure has been derived. It does not seem to be a figure taken directly from our report".
	Again, we need clarity, simplicity, and a willingness to see things through.
	This is not an issue on which we can afford either complacency or procrastination. There are measures that could and should be taken. We hope that the current energy review will deliver effective action. I look forward to the debate and the rest of our time together with much interest. I beg to move.
	Moved, That this House takes note of the report of the Science and Technology Committee on Energy Efficiency (2nd Report, HL Paper 21).—(Baroness Perry of Southwark.)

Baroness Sharp of Guildford: My Lords, as a member of the committee I pay tribute to the noble Baroness, Lady Perry, for her chairing of the committee and to our Clerk, Christopher Johnson, and our specialist adviser, Professor Roland Clift. The report was published last July, which is a while back, and there is much that I had forgotten that we had put into it. Therefore, I have been rereading it over the past couple of days. In doing so, I thought what a very good report it was.
	Across the field of energy, the report is comprehensive in all but one sense—it does not cover transport. As figure 3 on page 20—which shows the increases in the use of energy and in carbon emissions since 1970—illustrates so well, the one area that has seen exponential growth during that period has been transport. In some senses, I am rather sorry that we did not include transport, although it would have opened up a huge new area for us to look at. It is an area where we have done remarkably little to try to limit growth. In the recent Budget, the Chancellor increased the differential between the large-engine and small-engine cars, but, as so many people have pointed out, if you can afford to buy a Chelsea tractor, £45 is so little that it makes no difference at all. The big increase in transport has been aviation and it remains a scandal that aviation fuel is untaxed.
	Of the areas that the committee looked at, we start with the Prime Minister's statement in 2004 that climate change is,
	"the world's greatest environmental challenge",
	which is,
	"so far-reaching in its impact and irreversible in its destructive powers, that it alters radically human existence".
	That statement implies that, to a degree, we humans have to adapt and come to terms with the impact of climate change, but also that urgent action is needed on the part of governments to help people to adapt to and come to terms with climate change, and to mitigate its effects. Others, notably the chief scientist, have said that climate change poses a greater threat to our planet than the war on terrorism. One might, therefore, have expected that the Government would provide strong leadership in this area. Instead, as the report charts clearly, we have fragmented leadership and fragmented responsibilities.
	We do not even have a minister for energy who is taking the lead across the field. As the noble Baroness, Lady Perry, pointed out, responsibilities are split between the DTI, which has responsibility for the generation of electricity, and Defra, with responsibility for the environmental climate change agenda. In addition, the ODPM is responsible for building regulations and the Department for Transport is responsible for transport. On top of that there are a plethora of agencies and non-departmental public bodies dealing with this and that whose responsibilities are often unclear; whenever we try to find out what they do, they seem to have overlapping responsibilities.
	There was an opportunity after the last election for the Government to respond to the recommendation in our earlier report on renewables—and this report is in many senses a sequel—to establish clear departmental responsibility in that field. Again, they missed that opportunity and we observed the responsibilities of state being set up across the different ministries. For a government who came to power saying that they would give us joined-up thinking, this report illustrates just how little joined-up thinking there is in this area.
	A prime example of the muddle that the mixed responsibilities have brought is the failure to identify clear targets. The first chapter of our report set out the difficulties that we faced in examining the various government documents and establishing precisely what the targets were. We suggested that a clear numerator was needed, and that the impact on carbon emissions should be used as that numerator—a recommendation that has been rejected, as the noble Baroness, Lady Perry, pointed out.
	I was, however, interested to see that, in spite of that, the Government appeared to give us a back-handed compliment on the clarity with which we set out the position. They stated in their response:
	"The Government welcomes the Committee's accurate and clear breakdown of the various statements on carbon emissions, and how they have been derived. The Government believe that the table and figures provide an excellent guide to the carbon baseline and projections, and accurately reflect the path the Government has set itself to achieve a transition to a low carbon economy".
	That is from an excellent chapter which sets out precisely what the Government are aiming to achieve, and shows how difficult it will be for them to achieve the targets that they have set themselves for 2010 and 2020. Clearly, if you set yourself targets, you must be clear about what you want to measure, and it must be easily measurable and monitorable.
	The report refers to a lot of measures that are necessary to promote energy efficiency. We concentrated particularly on the domestic sector, which, after transport, is the next highest cause of carbon emissions in this country. Two points are worth noting. The technologies—the ways and means of reducing residential usage—are now well established. The key issue is housing. As the report points out, we have a stock of 25 million homes in this country. We are adding to that stock at a rate of about 100,000 a year. We are hoping to increase that to about 200,000 a year, so we are minutely adding to the stock. Therefore, the issue is as much about retrofitting older buildings as about coping with the new build. Nevertheless, building standards are a key issue here. We were very disappointed—as we stated at page 53 of the report—that:
	"Part L of Building Regulations will, even after the latest review, not match the best standards in Europe".
	We also noted the difficulties in enforcing those building regulations. On page 55 we mention a number of examples of where enforcement has fallen down. The report refers to:
	"Designs which met Government standards by including condensing boilers, but where developers cut costs by installing conventional boilers; a study by De Montford University revealed that 98 per cent of builders were failing to display energy performance certificates, required by the 2002 revision of Building Regulations; hot water cylinders in the Flagship Home in Westminster"—
	which we visited—
	"had only the most rudimentary, non-compliant insulating jackets; a survey conducted by BRE"—
	the Building Research Establishment—
	"revealed that two thirds of domestic buildings failed to reach the 2005 indicative standard for air permeability—which itself is three times less stringent than that applied in Germany".
	Those examples illustrate how difficult the enforcement of building regulations is. One of the things that worries us very much indeed is the possibility that we are now proceeding, through the route of competition, to self-certification in the building control process. The problems of enforcement illustrate also the problems of the lack of skills in the construction sector, which was another issue that we flagged up. That sector is short of something like 300,000 skilled workers.
	I refer to the permeability of buildings. In Sweden that is a significant measure of how far buildings are meeting the regulations. The Swedes are now putting a lot of emphasis on how far buildings are leaking heat into the atmosphere. Fitting windows is part of that. If you do not have people who can fit windows competently, you will have draughty windows, which is often the case in Britain. Air-tightness standards in Sweden are considerably higher than in Britain. The whole issue of training construction workers has to be tackled.
	Finally, we noted the lack of incentives to builders to install energy-efficient heating systems. So far as they were concerned, that added to costs, and it was cheaper to install under-floor electrical heating rather than condensing gas boilers, for example. There is little incentive to retrofit buildings, and VAT on repairs to buildings gives very little incentive to the individual householder to move in that direction. So far as concerns the individual householder, the behavioural issue is key. We found that area fascinating due to the perverse effect noted by the noble Baroness, Lady Perry. The money saved from introducing new energy-efficient boilers was often spent on extremely energy-inefficient items. We note in the report how people invest in conservatories, only to want to heat them, which is very inefficient.
	The importance of persuading people to change their behaviour therefore becomes central to the whole issue, and that leads us back to the notion of leadership. One interesting feature is that the population as a whole are now very environmentally aware and anxious to see what they can do. But the difficulty is that people perceive their own contributions to tackling climate change as small when they see what others do. When they see everyone driving Chelsea tractors or leaving lights on in their houses, they feel that it is not really worth making the effort to do anything.
	With regard to the waste area, I am interested in the degree to which local authorities have been able to develop some community spirit. I know that my noble friend Lady Maddock will talk at much greater length about what local authorities might do. That seems to be the way forward. We need leadership from central government, but that leadership must pass the buck to local authorities. It must pull together community spirit at a local level and encourage local communities to develop the sorts of initiatives that we saw in Leicester and Woking.

Lord Patel: My Lords, I apologise to the House for the switch in the list of speakers. I also apologise to the Front Benches if I have to leave before the end of the debate. I do not do so lightly, but I have another engagement that I cannot get out of. I am grateful to the Minister in that regard.
	I thank the noble Baroness, Lady Perry of Southwark, for her excellent chairmanship. It was a pleasure and a privilege to be a member of her committee. I also take the opportunity to thank our Clerk, Dr Christopher Johnson, and our specialist adviser, Roland Clift, for their unstinting support and advice.
	I want briefly to address two areas where I think that the Government's response requires further clarification. Those areas are documented in our report in chapter 8, entitled "Developing markets for heat", and in chapter 11, entitled "The longer term: Research". I know that if the noble Lord, Lord Wade of Chorlton, had been here to speak today, he, as president of the Combined Heat and Power Association, would have had more to say than I shall.
	From the evidence that we heard, from the reports on the visits to parts of Europe and from what I had seen, I was much impressed at how markets for heat had been developed in countries such as Sweden and Denmark, to mention but two from my previous visits. As our report states, demand for low-grade heat—that is, energy delivered at temperatures between ambient and the boiling point of water—for space and water heating represents a major proportion of the United Kingdom's energy demand. Domestic and water heating alone comprise around a quarter of total UK energy use. The development of effective markets for such low-grade heat could thus deliver significant carbon savings.
	While I accept that not all these potential benefits are explicitly to do with energy efficiency, they are closely linked. Government energy policy has hitherto consistently overlooked heat, concentrating instead on electricity, industrial process and transport. One example is the lack of any attempt to collect and use the large quantities of heat produced by power stations, and the energy lost via cooling towers. The absence of markets for heat has been identified by the Royal Commission on Environmental Pollution as one of the principal reasons why bioenergy has not delivered in the United Kingdom as it has elsewhere in Europe.
	There is also resistance from other sectors, particularly the building industry, in construction and development. There is an inherent conservatism in the building industry. Representatives of the House Builders Federation, for instance, told us that they could see no advantage in community heating for individual customers, citing the potential for losing energy through distribution ducting as one of the disadvantages. That is quite contrary to what the committee saw in Sweden, particularly in Gothenburg, where it was stated that the heat loss from ducting was of the order of 7 to 8 per cent from the entire 700-kilometre network.
	The conservatism of the construction industry is compounded by a lack of leadership from central government, and the Government's response documented that to a degree. I hope the Minister will take the opportunity to rectify that today, however, and no doubt correct me in my assertion. He may even announce robust, forward-thinking policy initiatives to encourage the building industry and others to develop markets for heat. As we said in the report, the most important and practical barrier to a community scheme is the initial capital cost. To overcome this and other barriers requires positive action to promote a market for heat.
	The Government have an important role to play. Again, as we stated, there is a clear need for a few larger-scale developments which can be promoted as demonstrations of the value and potential scope of heat provision. The proposed development of new housing in south-east England, with its high density, offers an extraordinary opportunity to develop community heating, but requires government action to make it happen. I hope the Minister will comment.
	I briefly turn to longer-term research. The Government's stated long-term goal is to reduce emissions to around 65 metric tonnes of carbon per year by 2050, from today's carbon emissions of around 150 metric tonnes. An achievement on such a scale would require a well resourced and co-ordinated programme of research and development. Again, the government response and the evidence in our report is not reassuring. Again, however, I have no doubt that the Minister will emphatically reassure us today.
	Certainly, the written and oral evidence we received from Research Councils UK and other witnesses failed to provide a clear picture of the level of funding and co-ordination of the UK research effort. For instance, direct government funding was channelled through no fewer than five departments. Even the level of funding from the Government, stated as £10 million, is in conflict with the data we received from IEA, according to which the level of UK funding in energy conservation and R&D in 2002–03 was zero.
	I acknowledge that, during the course of our inquiry, the Government announced an increase in funding to £70 million by 2007–08, from the science budget of energy R&D. This is welcome, but increased funding will be effective only if there is a strong research base in place. As Professor Skea emphasised in his evidence, in order to increase training capacity and gradually begin to develop courses, there is a need to raise funding as this capacity in people increases, particularly in the field of energy conservation. The Government need to signal a long-term commitment to this.

Lord Lewis of Newnham: My Lords, as a member of the committee, I thank the noble Baroness, Lady Perry of Southwark, for her excellent chairmanship of the committee. It was a pleasure to be chaired by a professional. I also take this opportunity to thank our support staff.
	As has been stated, the concerns with the problems of energy efficiency are related to the difficulties associated with carbon dioxide emissions and the potential for global warming. As the noble Baroness, Lady Sharp, indicated, the coverage of the report is extremely broad and I will concentrate on two aspects of it: the construction of new houses and the supply of heat to communities. I know that previous speakers have already touched on those points.
	A major programme is being mounted for the construction of housing, mainly in the south-east of the country. That gives a great impetus for the inclusion in those houses of modern developments that have occurred in house design, with particular reference to energy-saving procedures. It is important to recognise that buildings contribute 46 per cent of greenhouse emissions and thus provide an important target for reductions in emissions. The Government propose to build 1 million new houses by 2010, and we were concerned by some of the comments we received on the effectiveness of the present building regulations and their implementation by the building industry.
	The new variations in part L of the building regulations that have been introduced since the publication of our report are clearly a move in the right direction. They have the potential to improve energy standards by up to 40 per cent, but I echo the plea of the committee that the standard still falls far short of best building-energy standards in Europe. I welcome the Government's plan to introduce a new code for sustainable housing, utilising the EcoHomes standards and rating homes on a scale of zero to five in relation to their energy efficiency and carbon emissions—the five rating essentially corresponding to a carbon-neutral situation. We were told that that building condition has been illustrated by the BRE. It is pleasing to note that the new code will also include water efficiency standards, an area that has been neglected in previous regulations and is particularly important in water conservation. That subject is under particular pressure at the moment and is of major concern, particularly in the part of the country that is being proposed for the development of new buildings in the Government's plans. However, I have worries about the implementation of these plans as they are based on a voluntary scheme, and there seems to be little fiscal incentive to participate in it.
	The enforcement of the present building regulations was criticised by a number of the groups that we interviewed, as was noted by previous speakers. Although local authorities check plans for agreement with the building regulations as a prerequisite for planning permission, the checking and inspection of the final buildings for compliance is less effective. That position is further compounded by the fact that it is now possible to use approved inspectors who are not under the control of local authorities to give what is termed "self-certification". Professor Strong of the BRE told us that that procedure is believed to be driving down the quality of enforcement. He gave us a number of examples of non-compliance. I shall cite two, although I know that one has been mentioned. In a survey conducted by the Building Research Establishment, two-thirds of domestic buildings failed to attain the 2005 standard for air permeability and, as the noble Baroness, Lady Sharp, pointed out, that regulation is three times less stringent than the German standard.
	In addition, houses which met government standards by including condensing boilers in their design often had them replaced by conventional boilers, thus reducing the cost and the energy efficiency very considerably. Interestingly, the position of houses that fail to comply with building regulations is not clear. We were informed,
	"that there is no final sanction for buildings that fail to comply".
	I do not find the Government's comment in their response to the report on this position very consoling. They said:
	"One of the findings of the Energy Efficiency Innovation Review was that while levels of non-compliance may be high, the impact on carbon savings appears to be comparatively low".
	An admission that non-compliance is high seems to me to be a rather remarkable statement to be making, and I would certainly appreciate the Minister's views on it.
	This also raises the position of inspectors and inspections. The inspection will place a great load on the inspectorate as a whole. It has been pointed out by BRE that at the moment no arrangements appear to have been made for the training of this cohort.
	There is a corresponding potential problem with the supply of trained members of the construction industry. That point is touched on in the Government's reply, but there appears still to be a significant problem. That point was further emphasised by the noble Lord, Lord Harrison, in a Starred Question in the House last Thursday. He raised the problem of the recruitment of the skilled workers who will be required for the construction of the buildings associated with the Olympic Games in 2012. He stated that the construction industry estimates a requirement of 88,000 new entries per year, while the national skills agency for construction proposes only 20,000. There is a significant gap in those figures.
	In addition to the quantity of workers, there is also a quality problem. As we note in our report:
	"Skills shortages are compounded by a widespread culture of sloppy workmanship and cost cutting by builders. This must change and in tandem with improved enforcement of building standards we recommend that the Government strengthens the legal rights of purchasers who acquire poorly built properties".
	The Government do not discuss that point in their reply. Perhaps the Minister will comment.
	As pointed out by the Royal Institution of Chartered Surveyors, in addition to how we use power, we have to consider how we generate the power. Perhaps I may just consider that. It is pleasing to note that in the proposed new code for sustainable homes, credit will be given for the inclusion of micro-renewables such as wind turbines and solar panels in buildings. In our visit to Leicester City Council, we were told that it had developed a "solar rental" project, where residents are able to rent solar panels to provide hot water; the rental cost being offset against savings in gas and electricity. Leicester also has a well developed district heating system providing heat for 4,000 dwellings. At the moment this is gas-fired CHP plant, but there are plans to utilise a biomass generator. The position of district heating was also illustrated in the visit to Sweden and Germany where a variety of heat sources were employed, including incineration of waste.
	The Government's energy policy has overlooked heat as an energy source, as pointed out by my noble friend Lord Patel, and has concentrated mainly on electricity, industrial processes and transport. In the production of energy from a power station, approximately one-third of the energy is transposed to electricity and two-thirds is dissipated as heat lost into the atmosphere. That is a remarkable statistic.
	In addition to the potential utilisation of this form of heat loss, there are other carbon-neutral sources such as biomass, energy from agricultural, forestry crops and waste, as well as solid waste. As pointed out by the Royal Commission on Environmental Pollution, the lack of markets for heat was one of the reasons why bio-energy has not developed in the way that it has in Europe.
	In the 1950 to 1970 period, criticism was levelled at community heating schemes that had a poor record in this country on the basis of heat loss during distribution. In the visits to Sweden and Germany we inquired about the distribution losses. We were told that they were of the order of 7 to 8 per cent. That is significantly lower, or at least comparable, to the losses in distribution of electricity via the grid system. The incinerator recently built in Sheffield is, among many things, contributing to the heating of homes, the University of Sheffield, the University of Hallam, swimming pools, hotels, public amenities such as city hall, libraries, museums and schools, as well as local hospitals. That in itself is an impressive display of what can happen if we plan on a reasonably large scale.
	In marked contrast to that, SELCHP, the London incinerator at Lewisham, which has been in operation for a number of years, has the potential to heat homes, but none of that heat is being utilised for home heating. There is clearly great potential for the use of incinerators of waste products to produce energy. That must apply to many new developments being constructed. That is especially important with the redefinition of the use of incineration of waste in the waste framework directive. It is now possible with high-efficiency incinerators to redefine waste as recovery rather than disposal. That has important implications. As well as reducing CO2 emissions, the gas emissions from an incinerator at a point source may give the opportunity for sequestration of carbon dioxide emissions.
	I appreciate that the Government have provided about £40 million to boost local heating schemes, but how many schemes that include combined heat and power or incinerator programmes are being considered for the provision of heat to buildings in the new building programmes; and how many of the present incinerators using waste will be classified as recovery of waste rather than involving waste?

Baroness Maddock: My Lords, I very much welcome this report from the noble Baroness and her committee. I was especially disappointed that I was unable to take up an invitation to serve on the committee, so I have read the report with interest. I was especially interested to read about the visit to Sweden. I lived in Stockholm for three years more than 30 years ago. That was where I got my first interest in this area, when I lived for three years in a properly insulated property. I came home to Britain and put cavity wall insulation in my house. I always had an ambition to build a Swedish kit house on a piece of land somewhere and so live in a properly insulated building. As other noble Lords have said, we have still not reached that level in our building standards—and I am going back 30 years. That is a great disappointment to me.
	As the noble Lord, Lord Lewis of Newnham, said, the report is wide-ranging and I intend to speak only to one or two of the recommendations, which I strongly support, and shall try to explain my experience in those areas. I especially support the recommendation to try to get better co-ordination across government departments. The fact that Defra and the DTI have different responsibilities is mentioned, but, although it is mentioned elsewhere in the report, the Office of the Deputy Prime Minister is not mentioned there. I know that the rest of the report explains that.
	I was also interested in recommendation 12.14 about merging the Carbon Trust and the Energy Saving Trust. I say that because I have worked with the Energy Saving Trust for a number of years. Indeed, at one time, I recommended that those two bodies should combine. In fact, they do slightly different things—the Carbon Trust concentrates on business and industry and the Energy Saving Trust concentrates on the domestic sector—but we are very fond of setting up lots of different bodies to tackle things and, sometimes, we go a little too far. I have a great deal of sympathy with that recommendation.
	The other recommendation that I strongly support concerns the role of local authorities. I say that as someone who, when I was in another place, had the opportunity to take a Private Member's Bill through the House of Commons and, later, through this House, which became the Home Energy Conservation Act 1995. That Act set up local energy conservation authorities, based on housing authorities in this country, to enable them to draw out facts and figures about the state of the efficiency of homes in their areas and to draw up measures and plans to try to do something about it. The whole point of this was to be a starting point for the Government so that they had facts and figures to enable them to direct their money and their policies at solving the problems of energy efficiency in our homes. It is of great sadness to me that they have failed to use that opportunity. Indeed, over the years, they have not pushed local authorities to report on these matters, and the whole thing has become rather downgraded. I know from the work I have done over the years that local authorities are a good starting point.
	The first thing the Energy Saving Trust did was to set up a grant system, with money from the Government, called HECA—home energy conservation action. Grants were given to local authorities for projects in their areas, and it was my privilege over the years to chair the committee that distributed money in this way. The projects were wide ranging. There were all sorts of different schemes—there were local authority houses, private-sector houses and private-sector rented houses. Something interesting that came out of one of the studies was that people trusted the brand of a local authority. They would be a bit suspicious if any other flyer came through the door, but they trusted the flyer if it had the logo of the local authority on it. Therefore, if we are trying to persuade people to do things in their homes, we need to use the local authorities because we know that that helps. It has also been an enormous job creator locally. The HECA programme became the innovation programme, through which we tried to encourage people to come up with new ways of persuading people and of providing help to make homes efficient. I regret in a way that that programme has now come to an end, although the Energy Saving Trust will use all the experience that it has gathered over the years to help local authorities to replicate the best of the projects that came to our committee.
	Interestingly, the Energy Saving Trust has carried out a survey on how well prepared and equipped local authorities are and how easy it is for them to get involved to do the things they want to do in the areas of energy efficiency. It recently said:
	"Stretched finances, limited resources and a lack of support from councillors are some of the key barriers preventing the UK's local authorities from becoming more sustainable".
	It conducted a research project—a poll of 300 local authorities—which confirmed that,
	"there is widespread awareness of sustainable policies and an appetite to tackle climate change, but it is clear that local authorities need more support to translate willingness into action".
	I hope that that message will go home to the Government and that they will look seriously at the role of local authorities, particularly in the energy review.
	This leads me to building regulations, an area that noble Lords have already touched on, so perhaps I do not need to say quite so much about it. I know from the various groups that I have worked with over years, such as the Association for the Conservation of Energy and the National Home Information Council, that despite the regulations, Part L and what we have tried to do—my noble friend Lady Sharp of Guildford has also mentioned this—we know from various investigations that people are blatantly flouting the regulations and the rules. That happens in other areas of planning, I have to say, and we do not have a proper system for dealing with this. Quite frankly, we will have to deal with that problem if we really want to solve some of the other problems. I therefore very strongly support what has been said in this debate, and I hope that the Minister will be able to satisfy us a little when he comes to respond.
	On community heating, I declare an interest as a non-executive director of a heating company that provides district heating in Southampton from a combined heat and power plant which is supplemented by warmth from a geothermal borehole. It provides energy to the whole list that the noble Lord, Lord Lewis of Newnham, mentioned in respect of Sheffield. It is the same in Southampton. We are also very proud that we managed to get a Barratt Homes flats scheme on to the district heating scheme. So there is private and public sector heating on that scheme.
	However, the economics and the barriers put in place by the Government have not been helpful. In my time here, I am afraid that I have lobbied Ministers furiously over the disincentives to combined heat and power schemes. As the noble Lord, Lord Lewis, said, the trouble is that memories—including those of civil servants—go back to the very bad schemes that we had in England. I think that there was no insulation on distribution pipes. Therefore, everyone thinks that they are not very efficient. As the committee saw, in Scandinavia, that has been going on for years and it is done efficiently.
	In respect of my other love, I have to declare another interest—I am president of the Micropower Council—and my interest in microgeneration. Micro combined heat and power and other microgeneration are also very important. The Association for the Conservation of Energy has said in its response to the energy review how important this is. My noble friend Lady Sharp made a point about changing people's attitudes. Those of us who support microgeneration strongly believe that it can act as a catalyst for cultural change among consumers who put microgeneration products—for example, wind, boilers, photovoltaics or solar panels—in their homes. They suddenly become aware of a lot of other aspects of how they can save carbon and the energy that they are using, which is very important.
	I am most sad that the Government, who have, in many ways, done a lot of good in the small things that they have done, miss opportunities all the time. I have explained how they missed the opportunity to use the Home Energy Conservation Act. Other people have said similar things. I believe that the Government need better co-ordination and a better use of the existing mechanisms. They need to use local government more. There is a network which is ready to help to deliver many of the things that we all want to see. It is a network that can collect data and inform the policies of the Government to improve energy efficiency. I hope that in any future energy review, and in taking into account this very good report, the Government will take these things into consideration.

Lord Broers: My Lords, I, too, compliment the noble Baroness, Lady Perry, on the skill and energy with which she conducted this inquiry. It was a privilege to participate under her chairmanship and to be supported by our specialist adviser, Professor Clift, with his encyclopaedic knowledge, and with the usual immaculate support from Dr Christopher Johnson and his staff.
	I wish to comment on just one aspect of the need to engage the public more in the efficient use of energy. I joined the committee on its visit to Sweden and gained the impression, reinforced by what the noble Baroness, Lady Maddock, said, that the Swedes are more interested in energy use. They know a lot more about the use of energy.
	One reason why I feel that there is a lack of commitment in this country is that many people are not even aware of the ways in which they could contribute. Many do not even know how much energy they use. At present, the meters that measure the consumption of electricity and gas are often inaccessible. Even if they are accessible, they are difficult to read. Many energy bills are submitted on the basis of estimates rather than real consumption, confirming the fact that consumers have no knowledge of their consumption of energy in real time. In some modern apartment buildings here in London, such as the one I live in, the tenants do not even have keys to the cupboards containing their meters.
	There is no need for meters to be so inaccessible. Modern electronics enable smart meters to be made at reasonable cost, and these can be placed anywhere in the home, allowing people to see immediately and clearly the amount of power being consumed. For electricity, this might be in kilowatts or the accumulated energy that has been consumed. The latter could be shown in kilowatt hours or, of course, in pounds and pence. This would inform people immediately of the power consumption of different appliances in the home. It would be immediately obvious, for example, that an electric kettle consumes about 60 times the power of an electric light bulb. It would also be clear how much power is consumed by devices on standby and by those that run continuously, such as refrigerators. Before people go on holiday they could check that the power being used in their home is at a minimum, and that nothing is left running unnecessarily. I urge the Government to get on with large-scale trials to explore the use of smart meters, with the aim of incorporating them into building regulations for compulsory use.
	With modern power electronics, it is also possible to build at reasonable cost the equipment needed to interface carbon-free micro-generators of electricity to the supply grid. This could prove highly effective in reducing the generation of greenhouse gases. Consumers would be able to fit, for example, solar cells or small wind generators and use them to supply power for themselves or to feed power back on to the grid. The smart meter is able to operate in either direction, registering energy either consumed or supplied. There is also the possibility, as has already been mentioned, of including micro combined heat and power units that could perhaps be run on biofuels. All this would require regulation and the co-operation of the bulk supply companies, but there are many possibilities and the installation of such devices has the potential of making an important contribution both in the production of clean energy and, perhaps just as importantly, in engaging the public in the efficient and clean use of energy. I urge the Government to explore these opportunities.

Lord Redesdale: My Lords, I thank the noble Baroness, Lady Perry of Southwark, for initiating this excellent debate. I also thank our Clerk for preparing a report that is actually a readable tome. You can sit down and digest it. I have read many reports on this subject and it is clear that many people are deft at managing to avoid that.
	I, too, am one of those who think it is unfortunate that transport was not added to this report, although I understand that it would then have been about three times as long. However, this morning while bicycling my son to school—obviously I take the moral high ground in this debate—I counted the number of gee whiz electric cars on the road. It is a great sight to see because they reduce emissions. However, the problem is that you cannot consider them without an integrated policy. Electric cars draw their energy from the grid. That is a problem and is why they are frowned on in Germany. If brown coal has to be burnt in Germany to produce electricity to power such cars, the resulting CO2 emissions are seen as almost worse than petrol. That shows how difficult it is to favour one source of power over another. The report clearly states that in dealing with the first issue, which is of measurement.
	As we have just heard, the metering of electricity is almost a dark art. What you are charged may have no relevance whatever to what actually goes through your local system. Therefore when we talk of kilowatt hours and other measurements, perhaps we should move towards what I believe will become accepted over the next few years: energy efficiency based on grams of CO emitted to produce each kilowatt of power from source through to use. This is important, of course, because most people forget that 60 per cent of initial energy input is lost in generation in the grid before it reaches the home, and then an estimated 13 per cent is further lost through wastage of energy.
	This issue was raised in the debate last Thursday, when many noble Lords failed to mention energy efficiency at all—I was the only one to raise the matter—because at the moment, of course, the energy debate is based around the provision of nuclear. This is worrying because it gives the impression that, through the generation of nuclear energy, we will produce enough energy not to have to worry about energy efficiency, which of course is not the case.
	Being on the board of Carbon Neutral North East, I have a great deal of interest in how far up the political agenda the issue of climate change is growing and the amount of recent understanding about the link between our profligate use of energy and climate change. Of course, for my generation, unregulated use of electricity is seen almost as a human right. Last Easter, I had some friends with me at home in Northumberland when there was a power cut. There was almost a note of panic in people's voices: "What are we going to do without electricity; without the lights being switched on?". That is an interesting concept for those of us who have lived in other countries where there is no power grid and you either have to turn on a generator or do without electricity altogether.
	There seems to be a lack of understanding that people could use less electricity. A classic example of this is in the area of lighting. I have tried very hard to get people to change to low-energy light bulbs. The classic answer is, "Oh, I do not like the light". Well, Philips makes a fabulous new light bulb; it is soft glow, gives a very good light, lasts for six years—so you do not have to change your light bulb every year—and you can buy them in John Lewis for £3.95. Most people will say that that is an outrageous plug, but it is important that people realise they are cheap and easy. These light bulbs actually look like normal light bulbs, and therefore people walking into a room will not feel that there is something strange in there.
	This is an important point because research carried out by Carbon Neutral North East has found that while people will buy energy-saving light bulbs, they will then stick them under the sink—or wherever they keep spare light bulbs—in case of emergency and feel that they are contributing to energy saving by doing so. It is a question of educating people to use these things.
	I recently renovated my kitchen—well, I say that; my wife forced me into buying a new kitchen. If anyone has been in that position, they know it is a very expensive undertaking. The kitchen was designed and the kitchen designer then discussed the light fittings and how many there should be. At that point I stepped in and said, "No, I am afraid that is not what I am going to do". I took his plans and worked out that the lights he was suggesting for a small kitchen would have used 1.5 kilowatts in energy consumption. I immediately ripped out the three-way spotlights, each of 100 watts, that were in the kitchen and replaced them with two 20-watt energy-efficient light bulbs. I believe that the difference in the light given off is marginal.
	It seems almost as though we are driven by a consumer culture; that we must have transformers driving vast numbers of halogen bulbs and lighting up the underside of every single kitchen area. I have been to my friends' house, where they had had a kitchen put in which even had lights in the floor. It seems to me that that could be a health hazard if young children were to stand on the lights after they had been on all day.
	Another issue is the standby facility. Noble Lords have mentioned it, but we should put it into context. It has been calculated that 10 per cent of our generating capacity is used in standby. I hope that the Government will be pressing manufacturers to sign up to the 1 watt standby convention, whereby all standby facilities should use only 1 watt. The fire authorities have said that standby is a fire issue; fires have been caused and lives lost through people leaving on the video recorder stacked on top of the DVD, stacked on top of the television, all on standby, over the summer when they are away.
	Energy saving is a real issue. The report highlights how white goods should be labelled. This is particularly important because there is the horrendous move to digital TV, where everybody has gone out and bought a digital TV box—one more item to add to the other systems in the house. I admit that I have bought a digital TV box because of CBeebies. If you have children, you will understand. But I was amazed when I then looked at the box to find out how much power it was using, and I did some research into it. Some of these boxes use almost as much power on standby as they do in operation. They are generating heat the whole time and there is no way of finding out how much power they are using. It should be clearly stated; that would be a market incentive when manufacturers consider which product to bring out. The guidelines should be much clearer and much tougher.
	The report discusses fridges and freezers, moving from the A rating to the A++ rating or the AAA rating. I find it interesting that imported large stand-up fridge-freezers, with a fridge on one side and a freezer on the other, should get an A rating. When you open the door of a stand-up freezer, cold air will automatically fall out. I believe that only box freezers should have an A rating. It may seem like a small point, but every time you open the freezer, there is a real energy requirement to replace that cold air.
	I have two quick questions for the Minister. I do not think he will be able to answer them this evening but I hope he can write to me. I confess that I thought the noble Lord, Lord Sainsbury of Turville, would answer the debate; this shows that there might be a degree of misunderstanding about certain issues. I believe that there should be a ministry that encompasses all energy issues; the divide between Defra, the DTI and the ODPM is causing confusion and problems, and one of my questions relates specifically to the divide.
	I recently introduced a Private Member's Bill on dynamic demand devices. These are not sex toys as somebody once guessed, but chips which go in your fridge and listen to the background hum of the grid. The grid is stressed at times of peak use—at half-time of the World Cup final, say, when everybody puts their kettle on—which leads to a spike. I did not realise that it is not just a question of putting the kettle on but of flushing the loo at the same time: the mechanical energy of shifting billions of gallons of water around the country causes a larger proportion of the peak use than putting on kettles. At such a stress point on the grid, the chip would switch off your fridge, freezer or air-conditioning unit. Using such a device on millions of fridges for only that short time would avoid using one of the power stations that is on standby to meet the demand.
	In the Climate Change Bill which is going through another place and which should come to us shortly, the DTI has taken responsibility for the background research to prove that this is a workable proposition. Industry already says that it will spend money on working out how to insert the chips into fridges and freezers. However, at meetings between the DTI and those pushing for dynamic demand, no indication was given of how much money would be made available to pay for this background research. It said that we could apply for funding in July and that it might come through in December. This technology could save between 0.6 and 1.2 million tonnes of carbon a year. If that is the case, should there not be some urgency in finding the money in the DTI to meet that funding? I hope that the Minister can give me some indication of the position.
	My second question relates to a microgenerating technology in which I am interested. Solar thermal panels, which take heat from the roof and dump it in your hot water tank, are a growing technology, and they will become increasingly important. I was contacted by a company called Solar Twin, which has introduced a new design technology for making this appliance work. However, it has been left out of Part L of the ODPM's building regulations. Unless a technology is covered by those regulations, it is illegal for a builder to fit it. Therefore, new technologies are being denied access to the marketplace. I hope that the Minister will consult the ODPM and come up with a reason why this new technology has not been covered in the regulations.
	I have taken far too much time at this time of the evening. We are probably the only Members in the House on a Thursday evening, so I will end on the important topic of education. Energy efficiency is about education and making people understand how important it is. I understand that Defra's climate change programme is supplying money for projects around the country to increase education. I was very interested to read in the report about how energy is wasted on the parliamentary estate. At about the same time, I visited Black Rod to talk about energy efficiency in the building. He said that one can break down energy efficiency into three areas in a building such as this. The first area is the fabric of the building, to which as much is being done as is possible in a Grade I listed building. The second is the systems that are in place, such as fitting energy-saving light bulbs around the building. That seems to have taken off in the past year or two. The third element, which was left out of the report, is something over which Black Rod has no control; that is, how Peers use electricity and how they use resources. We are all guilty. Walking around the building, I have been amazed by how almost every office one goes into has the lights on. Most offices have left-on computers. Screensavers do not save electricity, but people leave computers on the whole time.
	We on these Benches have discussed this matter and will put around a paper to all our Members about switching the lights off. I hope that we can then talk to other party groups about implementing it among all Peers. An individual effort will have to be undertaken by each Peer. However, it should be stated on the boxes even of energy-saving light bulbs that the most efficient light bulb is one that, when it is not being used, is turned off.

Lord Dixon-Smith: My Lords, like other Members, I am most grateful to my noble friend Lady Perry of Southwark for her introduction to this interesting, detailed and, if I may be forgiven for saying so, now somewhat dated report. One starts an examination, the examination takes a considerable amount of time and, when one comes to the end of it, one has to await a government response. That is one of the tragedies of our procedures. Here we are, after 21 months, debating something that began as a very topical and relevant issue in 2004; today, the issue is even hotter and more topical. The committee has—the noble Baroness will understand the euphemism, but if the Minister does not like it, that is too bad—been shooting at a moving target.
	There has been some progress over time. One change that I welcome is that the Government have now appointed Mr Malcolm Wicks as Minister of State for Energy, with responsibility for energy issues, sustainability and the environment. This is not strictly relevant to the report, but none the less it is progress and a clear sign that the Government are at last beginning to take the issue seriously. But could the Minister explain exactly what his honourable friend's job is? Is he going to be able to control and manage energy matters and policy, or is he simply a co-ordinator between departments? He is in the DTI, so what is his relationship with Defra and, equally important, with the ODPM? If he is simply there to co-ordinate ideas, to keep a record of what is going on and to refer the whole lot up to somewhere else in government, I am not entirely sure that I would regard that as real progress, although it is a beginning.
	I am immensely glad that it is the noble Lord, Lord Bach, who has to respond to this report in all its detail, and indeed to this debate, because I am happy to confess that if I had to do it, it would take me more minutes than noble Lords present would think was reasonable. I do not intend to take too long to respond to this debate, because I know that the Minister will respond to many of the points that have been made and it seems superfluous that I should do the same.
	To me, one of the most important diagrams or graphs in the report occurs on page 27, in figure 6, which shows the energy intensity of the economy from 1970 to 2003. The graph is in one sense very encouraging, because it shows that the economy has more or less doubled in that time and that energy use per unit of output has more or less halved. There are a great many reasons why one should be very pleased that that has happened, but the report also shows that energy usage across the country has continued to rise over that time. The implications of that are really quite fundamental because, despite a very serious and gratifying increase in energy efficiency, we have not actually controlled energy consumption, a matter raised by a number of speakers this evening.
	The other point that needs to be made is that energy efficiency does not necessarily have anything to do with carbon emissions. Of course, if one is using a mineral or hydrocarbon-based fuel, one will still have carbon emissions even if one is using less energy. Under the diagram on page 27 is an explanation of the wonderfully titled Khazzoom-Brookes postulate, which I took to mean very roughly that energy economy is all too often matched by greater energy use. Although the Government in their response to this part of the report—it is on page 24—are rather dismissive of the Khazzoom-Brookes postulate, if we stop and think about it, the postulate needs to be taken very seriously. We only have to look around our own homes to see that it is almost certainly a reality. Look in our kitchens and living rooms at the gadgets that we have now compared with 30 years ago. Heaven help us, but look in our children's bedrooms at the gadgets that they have, which were not dreamt of 30 years ago and are completely beyond my comprehension. As the noble Lord, Lord Redesdale, rightly said, most of these gadgets are on standby, busy consuming electricity all the time.
	However much we want energy economy, I do not think that society will wish to be deprived of all these gadgets. Indeed, we have a whole lot of very innovative and clever businesspeople who will be dreaming up yet further similar things for us to use in our homes. We have them in our offices: 30 years ago, the place would have been full of manual typewriters, whereas now it is full of computers on everyone's desks, all electric and all on standby.
	To me, Khazzoom-Brookes is very real. We will not get global warming, and particularly carbon emissions, under control without having a fundamental look at our energy sources and changing the way in which we get our energy. That to me is the great lesson that comes out of this report. It is immensely detailed and helpful in so many other ways, but that is the issue that we need to take home and think about most seriously.
	The confusion between energy economy and the need to control carbon dioxide emissions has to be resolved. What matters is limiting those emissions. If society wants to use lots of energy in the future, as I am sure it will, we will have to provide that energy in ways that do not involve increasing carbon dioxide. Indeed, if the Government are to meet their long-term strategic objectives, energy sources in the future will have to be non-mineral hydrocarbons to a great degree.
	Although I accept that carbon capture and storage may provide some relief, I still regard that rather in the class of the alchemists' dream in the Middle Ages to transmute base metals into gold. We might achieve it, but it is still very much a "might". I am not sure that we can afford to wait to find out whether or not we can achieve it. We also need to realise that, even if we get it, it will apply only to very limited sections of the community, because it can only really be applied to very major carbon dioxide-emitting establishments, and they are relatively limited in number. It will do nothing to help the domestic sector or transport, which probably account for 60 per cent of carbon dioxide emissions.
	A lot has been made of what goes on in the building industry, and I will touch only on one aspect of it, which seems to me to be vital. Much has been made of the need to improve the standards of new buildings, and of course that is right. The noble Lord, Lord Lewis of Newnham, mentioned the million new houses by 2010. We need to appreciate that that is only 4 per cent of our housing stock. We have 25 million homes that need to be brought up to the same standard as the new homes that we are demanding. In the end, property owners must face an economic decision. It has always been thus. The question is whether the cost of reducing energy use, moderated by any fiscal incentives that may be provided, produces a real financial return. If it does not, regrettably, property owners and even housing trusts will not make the investment to reduce their energy consumption. When we come to the 25 million existing homes, it is extremely difficult to see how to deal with that issue or whether the Government have any real plans to deal with it at all.
	The final depressing thought that I wish to throw at the Minister concerns a friend of mine who thought that it would be a good idea to put a condensing boiler in his house to reduce his energy consumption. Being a sensible chap, he thought that he would investigate it a little. He went to the Carbon Trust, but it could give him no helpful information at all about what it was likely to cost him or how he could do it. He then went to the boiler manufacturers and, surprisingly, got precisely the same answer.
	We have a long way to go. The Minister has a major task in answering this report. I was depressed by the Government's response, because although it was full of information, that information struck me as being rather like the Government's approach to this subject until now. I give them credit for beginning to get their act together, but until now there has been confusion, a piecemeal approach, a lack of co-ordination, a lack of focus and, inevitably, a lack of results. We must do better.

Lord Bach: My Lords, I start by thanking all noble Lords who have spoken in today's debate, in particular the noble Baroness, Lady Perry of Southwark, and all the members of her sub-committee and the members of the wider committee who have spoken today. I also thank them for the comprehensive and detailed report that they produced last year.
	We set energy efficiency at the heart of our energy White Paper in 2003, and it makes a key contribution to reducing carbon emissions as well as our other energy goals of improving competitiveness, ensuring security of energy supplies, and not least helping to alleviate fuel poverty. As has been quoted, the Prime Minister has said on more than one occasion that the Government believe that climate change is the greatest long-term challenge facing the world today. Therefore, we welcome very much the House's attention to this most important issue, and we thank the noble Baroness for bringing her report to the House.
	We have made considerable progress since the committee published its report, in particular through this year's Budget and in the UK climate change programme. I will not attempt in the time available to summarise the Government's comprehensive response to what was a very substantial report. However, following the advice given by the noble Lord, Lord Dixon-Smith, I will, if I may, briefly outline the key developments, some of which have taken place since the report was published, that address some of the significant issues raised by the committee. I shall therefore not cover all the questions that have been asked. I will try to write to noble Lords with answers to those questions, including the two asked by the noble Lord, Lord Redesdale. Before I move on, however, I should tell him that I am one of those who does his best to remember to turn off his light when I leave my room in this House.
	The energy efficiency commitment is one of the two main policies designed to promote energy efficiency in households. We will seek to achieve substantially higher carbon savings from the energy efficiency commitment in its next phase from 2008 to 2011, representing a 50 per cent to 100 per cent increase on the current scheme. We have also made amendments to a Private Member's Bill in the other place which, if successful, could set the energy efficiency commitment targets more explicitly in carbon terms and allow the inclusion of a wider mix of measures including microgeneration and behavioural measures.
	The committee rightly highlighted the importance of building standards, a matter which has been highlighted by practically every noble Lord who has spoken today. This month, new provisions in the building regulations came into force which, combined with the previous revision in 2002, give a 40 per cent improvement in the energy performance of new buildings. To secure better compliance with the regulations, the Government have engaged in an unprecedented dissemination programme aimed at ensuring that all stakeholders can acquaint themselves with the new requirements of these regulations, and we have introduced a comprehensive training programme for building control surveyors and a requirement for air-pressure testing. We are also conducting a comprehensive review of measures to tackle existing buildings—which are, as the noble Lord, Lord Dixon-Smith, pointed out, the majority by a long way—which will make recommendations to Ministers this summer.
	The committee highlighted the role of the Code for Sustainable Homes, which will set out voluntary standards going beyond the minimum set out in the building regulations themselves and signal the future direction of regulations. We have reissued a strengthened draft code in which even the lowest energy standard goes beyond regulations. All publicly funded housing will have to comply with code level 3, demonstrating strong public leadership. To encourage on-site energy generation, new homes that use micro-renewable technology such as wind turbines will gain extra code points.
	The noble Lord, Lord Lewis of Newnham, was one of those who said that building standards do not compare with the best European standards. Perhaps I may answer by saying that anyone who looks at this matter objectively would know that building standards are not low in the United Kingdom. Our current standards are comparable with those of other European countries with similar climates. We have signaled our intention to review the regulations every five years. Regarding his other question, on the number of installations, I hope he will forgive me if I write to him, as I do not have the figures to hand.
	The committee rightly raised the importance of consumer behaviour. The joint Defra/Treasury energy efficiency innovation review which was published last December, after this report was published, recognised that lack of consumer awareness represents a major barrier to the uptake of energy efficiency measures, a point that was echoed in the House tonight. In response, not only are we working to enhance our climate change communications initiative to change public attitudes to climate change at every level; we have also announced a major new initiative to strengthen consumer demand for energy efficiency. Through this, we will work closely with energy suppliers and local authorities—I hope that the noble Baroness, Lady Maddock, will at least be pleased with that—with funding of £20 million over the next two years. We will be announcing further details shortly.
	It has been demonstrated in other countries that the provision to consumers of detailed information on their energy use helps to deliver energy savings, and we have committed to deliver significant savings in that way by 2010. Rather against expectations, the UK secured a first reading deal during our EU presidency on the energy end-use and energy services directive. This includes robust provisions on smart metering, which we are now preparing to implement. This year's Budget also included £5 million to pilot feedback devices, such as smart meters and other related technologies. I hope that the noble Lord, Lord Broers, who mentioned smart metering in particular, will be pleased when I tell the House that only yesterday the Environment Minister, my colleague the honourable Elliot Morley, launched the first interactive smart metering trial in the residential sector. This trial, managed jointly by EDF Energy and National Energy Action, will see 3,000 electricity and smart gas meters installed in homes over the next two years. I hope that that brief announcement counters some of the views that have been fairly prevalent in the House tonight about the Government's response.
	With energy prices rising, it is more important than ever to help vulnerable consumers to heat their homes. We have increased funding for the Warm Front scheme in England, which delivers energy efficiency measures to low-income households, by a further £250 million. That brings funding to a level in excess of £800 million between 2005 and 2008.
	The committee rightly highlighted the potential for heat generation from renewable sources. In the climate change programme, we announced a new support scheme for biomass heat in the industrial, commercial and community sectors. The scheme will run for five years and will be worth at least £10 million to £15 million in England over the next two years. The Energy Minister, Mr Malcolm Wicks, who has been referred to in the debate, and I were delighted to come together. I was asked about the relationship between Mr Wicks and Defra. From this morning's meeting, I can say only that the relationship is extremely good. We were delighted to announce earlier today our action plan for renewable energy in biomass, which forms our response to the Gill task force report, published last October.
	I am sure that noble Lords will have read that report carefully and will have taken note of the suggestions in it concerning the relationship between biomass and heat. The report, which we have largely accepted, provides a clear path forward and includes a capital grant scheme for biomass boilers, the establishment of a new biomass centre to give expert information and advice, agreement in principle to further grant support for energy crops, and a commitment to use biomass heating, wherever appropriate, in government buildings. I am sure that members of the sub-committee who produced the report will be pleased about that.
	The public sector has a key role, both directly through its considerable powers of procurement and, more broadly, through its leadership. We have set up a new revolving loan fund of £20 million to finance investment in public sector energy efficiency, and we will also introduce new strategic targets for the central government estate this summer. We want to see a significant increase in the level of engagement by local government in all climate change issues. This year's climate change programme sets out a range of new measures to increase the contribution of local and regional government to our climate change goals. These include funding of £4 million over three years to roll out a new package of measures to help thousands of community groups across England to take action on sustainable development, including climate change.
	It is clear that we must tackle energy use in every part of the economy if we are to deliver the step change in energy efficiency to which we are committed and which the report clearly suggested we should adopt. For example, the Secretary of State and I yesterday launched a strategy to tackle the impact of the food industry on precious resources such as energy, and its contribution to climate change. The food industry sustainability strategy—or FISS—addresses all sectors of the food industry, beyond the farmgate to the consumer's plate. It provides a framework for improving the sustainability of the food and drink industry through widespread adoption of best practice.
	In the past, our climate change programme has focused on energy-intensive users in the business sector and households. Noble Lords have also highlighted the importance of addressing emissions from smaller businesses. We are providing additional resources of £15 million for the Carbon Trust to expand its loan scheme whereby small and medium-sized enterprises can receive interest free loans of between £5,000 and £100,000 for energy efficiency investments.
	The committee and the noble Baroness, Lady Perry, in her opening speech, raised the issue of the so-called "rebound effect", whereby cost savings from energy efficiency lead to increased spending elsewhere, offsetting some or all of the original energy savings. Following the publication of the report and its recommendations, Defra has commissioned two independent expert studies which are about to be published. They confirm that the total rebound is likely to be of the order of 25 to 40 per cent. While that is a significant factor, it by no means negates the value of energy efficiency improvements, as some have suggested. As an ancillary finding, the models have revealed a positive impact from improved energy efficiency on productivity in the UK economy and on employment. Copies of both studies will be placed in the Library, and they will of course go on the Defra website. I shall ensure that all members of the committee receive copies as soon as they are published.
	The committee stressed the importance of energy research and highlighted the comparatively low level of UK funding. In last month's Budget, the Chancellor announced a new national institute for energy technologies. This represents an opportunity to tackle key energy research challenges, to accelerate progress towards a low-carbon economy and to help ensure reliable long-term energy supply. The combined public and private investment envisaged for the institute is around £1 billion over its 10-year lifetime.
	I have not been able to respond in detail to all the many points raised, but I will do my best with one or two. The question of how government should be structured to deal with the issue is obviously important and was raised in the report and on the Front Benches. Tackling climate change obviously means influencing every sector of the economy: housing, health, education and transport as well as, of course, the energy sector. The argument is over whether it is realistic to expect all these sectors to be the responsibility of any one department or Minister. The House will know that in May last year the Prime Minister set up the Ministerial Committee on Energy and the Environment, which he chairs, reflecting the importance we attach to meeting our domestic and international targets and to securing a high level of commitment across government to effective climate change mitigation policies.
	Frankly, there will always be departmental divisions, whichever way responsibilities on climate change policies are split. It is clear that the Secretary of State for the Environment leads the UK's work on reducing greenhouse gas emissions and its adaptation to the effects of climate change. However, it is important to secure a high level of commitment across government, as the important Sustainable Energy Policy Network, made up of senior Ministers, enables us to do, rather than trying to bring more and more areas of policy within the direct control of any one Minister. The question I pose to the Front Benches is this: they can criticise the present structure as much as they like, but what can I look forward to hearing proposed—perhaps in the case of the Conservative Party in about 18 months' or two years' time—as an alternative to deal with this issue?

Lord Dixon-Smith: My Lords, since the Minister has flicked a fly, I cannot resist rising, but not to attempt to answer his impossible question about the position we might wish to advocate in 18 months' time. I am not certain from his explanation of the existing structure whether the reduction of emissions controls energy policy or whether energy policy drives emissions reductions. Can he answer that conundrum?

Lord Bach: My Lords, I cannot do so tonight, nor shall I try to.
	I have not been able to answer all the many points that have been raised. I hope that noble Lords will at least think that we have presented a picture of widespread activity and that we have taken action to respond to at least some of the committee's recommendations. I can promise that we will continue to reflect on, look at and use the report, which contains an impressive wealth of evidence.
	I want to emphasise that this year's climate change programme is by no means the last word on energy efficiency. The energy review is looking at the UK's energy framework in the medium to long term, and the review team is looking at options to achieve additional energy savings. Where there are issues of public expenditure—on research, for example—the forthcoming comprehensive spending review is the appropriate vehicle for our response. Those reviews will give further opportunities for the Government to strengthen the current energy efficiency policy package.
	It will come as no surprise to the House to hear me say that I refute the attacks on the Government's performance in this field. The examples I have given and the other examples generously given by noble Lords in this debate show that the Government take this issue extremely seriously and have many plans of action in place. That does not prevent me thanking the noble Baroness again for introducing this debate and thanking her committee for its report.

Baroness Perry of Southwark: My Lords, at this stage it is the convention to thank noble Lords who have taken part in a debate, but my thanks go far beyond the convention. To see the enthusiasm and expertise of noble Lords who have spoken in the tired, long hours of a Thursday afternoon and evening is a remarkable event. I give my heartfelt thanks to all noble Lords who have taken part. I also thank the Minister for his detailed, careful and courteous reply to the debate. It is good to hear that so much has been happening since our report was published a rather long time ago. I would like to think that our report perhaps played a small and modest part in some of the Government's thinking on this. Once again, I thank all noble Lords who have taken part.

On Question, Motion agreed to.

Northern Ireland Bill

Brought from the Commons; read a first time, and ordered to be printed.
	House adjourned at nineteen minutes past seven o'clock.